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Essential  Elements  of  Business 
Character 


Essential  Elements 

of 

Business  Character 


New  York    Chicago    Toronto 

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A  Few  Words  in  Advance 

IT  has  given  me  a  great  deal  of  pleas- 
ure to  write  these  few  notes  concern- 
ing some  essential  elements  of  busi- 
ness character  as  I  have  seen  them  in 
successful  men  of  my  acquaintance. 

When  these  thoughts  were  first  set 
down  on  paper  I  had  no  idea  of  publish- 
ing them  in  book  form,  nor  had  I  any 
anticipation  of  the  kind  things  that  have 
been  said  about  them.  There  is  so  much 
drawing  power  in  the  subject  itself  that 
young  business  men  and  women  are  eager 
to  read  anything  written  about  it.  To  that 
desire  I  attribute  the  request  that  my 
articles  be  published  in  this  little  book. 

Any  attempt  to  analyze  business  char- 
acter leads  one  almost  surely  into  the  use 
of  time-worn  platitudes.  A  summary  of 
the  qualities  which  business  men  should 
possess  may  be  expressed  in  a  few 
phrases,  such  as — he  must  thoroughly 
understand  his  business,  must  be  thor- 
oughly reliable  in  his  dealings,  and  must 
[5] 

384609 


A  Few  Words  in  Advance 

have  the  ability  to  attract  attention  to  the 
goods  or  services  which  he  offers. 

When  the  observer  has  thus  summa- 
rized business  character  he  has  covered 
the  ground  pretty  well,  and  yet  it  leaves 
him  dissatisfied  because  he  has  said  noth- 
ing on  which  an  inquirer  could  pin  a 
definite  resolution.  No  clue  is  disclosed 
by  which  the  student  can  seek  further  light. 

Now,  simply  to  open  the  subject  a 
little  further,  I  have  noted  a  few  experi- 
ences with  a  thought  or  two  drawn  there- 
from. The  reader  will  oblige  me  if  he 
considers  each  chapter,  not  as  an  attempt 
at  a  complete  treatise  or  essay,  but  rather 
as  consisting  of  notes  on  several  aspects 
of  business  character  as  I  have  found 
them  in  successful,  living  business  men. 

Some  of  these  chapters  appeared  as  a 
series  in  The  Outlook  last  winter,  and 
the  others  have  been  added  for  the  pur- 
pose of  extending  a  few  of  the  thoughts 
into  further  details. 

H.  G.  S. 

Philadelphia. 

[6] 


Contents 

x. 

Business  Organization   . 

9 

II. 

Business  Knowledge 

19 

III. 

Business  Energy     . 

35 

IV. 

Business  Reliability 

48 

V. 

Business  Economy  . 

63 

VI. 

System  in  Business  . 

78 

VII. 

Financial  Ability  in  Business 

89 

VIII. 

Some  Overlooked  Expenses  . 

107 

IX. 

Imagined  Profits    . 

118 

X. 

Business  Sentiment 

132 

[7] 


I 

BUSINESS  ORGANIZATION 

ON  the  train  recently  I  met  one  of 
my  friends  in  whose  office  a 
complete  system  of  accounts  has 
been  lately  installed.  He  was  enthusi- 
astic over  the  innovation  and  seemed  to 
feel  that  he  had  at  last  started  on  the 
highway  to  success.  In  discussing  the 
matter  I  put  to  him  this  leading  question: 

"  What  are  you  going  to  do  with  the 
system,  now  that  you  have  it? " 

"  Oh,  we  are  going  to  reduce  our  costs 
and  increase  our  business,"  he  replied, 
optimistically. 

"  Do  you  expect  the  new  system  to  do 
all  that  for  you  ?  " 

"Of  course  it  will,"  said  he.  "Why 
not?" 

"The  system  of  accounts  that  you  have 
will  not  reduce  your  costs  or  increase 
your  business." 

"But,"  he  interrupted,  "it  will  show  us 
[9] 


Essential  Elements  of  Business  Character 

where  we  can  reduce  expenses  and  in- 
crease our  business,  won't  it?" 

"  That  is  partially  true ;  it  will  furnish 
you  with  figures  which  you  can  compare 
with  such  expenses  as  you  have  charged 
in  the  past,  and  also  such  as  you  will  in- 
cur from  now  on.  The  accounts  as  now 
kept  will  also  furnish  you  with  much 
other  valuable  information,  if  used ;  but 
the  finest,  most  comprehensive  and  best 
system  possible  to  devise  will  not  furnish 
you  with  brains." 

Then  I  told  him  what  I  shall  take  the 
liberty  of  saying  here  : 

System  as  generally  understood  will 
not  reduce  expenses,  nor  will  it  increase 
business.  Forms,  methods  and  accounts 
properly  classified  constitute  good  tools, 
but  only  tools.  It  will  take  men,  and  men 
of  just  the  right  calibre,  to  fill  each  and 
every  position  calling  for  the  exercise  of 
judgment  in  the  conduct  of  the  business. 
S  The  right  man  should  be  found,  and  he 
should  be  put  in  the  right  place. 

We  very  often  overlook  the  fact  that 
no  two  men  are  in  character,  tempera- 
[10] 


Business  Organization 


ment  or  education  exactly  alike.  Each 
and  every  one  has  some  individual  ability 
which,  if  discovered  and  utilized,  will 
bring  success  not  only  to  him,  but  to 
those  who  are  depending  on  him  for  the 
performance  of  his  duties. 

A  man  who  is  performing  his  proper 
function,  that  is,  doing  what  he  is  fitted 
for,  should  work  easily.  His  eyes  never 
seek  the  clock.  He  is  absorbed  in  per- 
fecting his  work,  yet  he  does  not  bustle 
about.  He  never  appears  worried.  The 
man  who  is  worried  and  harassed  is  not 
in  his  right  place.  The  man  who  is  both 
fit  for  his  work  and  fitted  to  his  work  will 
work  quietly,  but  with  telling  force. 

BRAINS  APPLIED  TO  ORGANIZATION 
The  man  who  has  his  business  so  or- 
ganized that  he  can  go  away  from  his  of- 
fice for  a  reasonable  time  without  causing 
a  ripple  in  the  business  has  executive 
ability  to  a  sufficient  extent  to  organize 
his  working  body  of  help  properly.  The 
executive  cannot  carry  all  the  work  on 
his  shoulders.     The  good  executive  soon 


Essential  Elements  of  Business  Character 

realizes  this,  so  he  builds  up  his  machine 
and  perfects  it  to  a  higher  and  higher  de- 
gree of  efficiency. 

Any  man  who  worries  about  his  business 
too  much  should  change  it.  He  is  not  in 
the  right  place.  Things  may  go  wrong, 
and  it  may  be  troubles  will  come.  A 
man  may  care  ;  yes,  he  must  care.  It  is 
foolish  to  think  otherwise  ;  but  if  the  right 
man  finds  himself  in  the  right  place  he 
will  not  allow  the  troubles  to  get  hold  of 
him  to  a  sufficient  extent  to  prevent  him 
from  thinking  clearly  and  getting  things 
back  on  the  right  track  again. 

One  of  my  friends  has  for  his  "job" 
the  distributing  of  a  product  of  about 
$45,000,000  annually.  He  has  his  men 
so  well  organized  that  he  can  "take 
things  easy."  He  plays  golf  at  least 
twice  every  week.  His  men  do  the 
scratching  around,  and  he  directs  the 
scratching  with  a  cool  head. 

PRESIDENT  SELLING  GOODS 
The  president  of  a  very  large  contract- 
ing company  said  to  me  the  other  day : 
[12] 


Business  Organization 


"  I  have  been  wondering  whether  I 
ought  not  to  give  up  seeing  customers, 
and  spend  more  time  looking  after  things 
generally." 

"  That  seems  a  wise  thing  to  do,  as  a 
general  proposition,"  I  said. 

"  But,"  said  he,  "  I  cannot  find  sales- 
men who  can  sell  things  the  way  I  can." 

"  You  ought  to  be  able  to  find  good 
salesmen,"  I  observed. 

"  Not  in  my  business,"  he  replied. 
"  Let  me  give  you  an  example.  Last 
week  we  received  a  letter  from  up  the 
state  requesting  us  to  send  a  man  to  see 
about  some  slight  alterations  in  a  resi- 
dence. I  jumped  on  a  train  myself  and 
after  suggesting  to  the  people  some  ad- 
vantageous rearrangements  of  their  resi- 
dence, by  which  certain  unused  rooms 
were  made  available  and  comfortable, 
brought  back  a  $10,000  order.  My  men 
would  have  got  a  small  order  for  just 
what  the  party  at  first  thought  he  wanted, 
which  would  have  amounted  to  not  over 
forty  dollars  I  haven't  any  salesmen 
who  could  do  what  I  did."     It  is  clear 

[13] 


Essential  Elements  of  Business  Character 

that  he  had  ability  to  sell  but  he  lacked 
something  of  perhaps  more  importance 
in  the  general  conduct  of  his  business. 

Executive  ability  consists  in  getting  the 
right  men  in  the  right  place  and  keeping 
them  willingly  at  the  top  notch  of  en- 
deavour. While  it  is  true  that  it  is  hard 
to  get  good  men,  it  is  much  harder  to  know 
and  realize  the  kind  of  men  required. 

A  man's  mind  has  two  channels ;  one 
through  which  flows  thoughts  connected 
with  the  daily  routine  of  living  and  at- 
tending to  ordinary  affairs  of  life  and 
business.  In  the  other  and  higher  chan- 
nel are  thoughts  concerning  the  possi- 
bility of  greater  usefulness  and  larger 
opportunities  for  the  helpful  employment 
of  capital  and  labour. 

When  such  thoughts  as  these  strike 
your  consciousness,  sit  back  in  your  chair 
for  a  few  moments  and  think  them 
through.  Such  thoughts  are  too  precious 
to  lose. 

A  mailing  clerk  handed  in  his  resigna- 
tion to  a  large  manufacturer  the  other 
day,  giving  as  his  reason  that  the  work 
[*4j 


Business  Organization 


was  too  monotonous.  The  president 
sent  for  the  clerk  and  asked  him  whether 
he  realized  what  an  important  part  the 
circulars  of  the  company  played  in  back- 
ing up  the  salesmen. 

"  Do  you  know  that  every  sale  we 
make  helps  to  keep  our  employees  in 
bread  and  butter?  Every  effort  you 
make  on  that  mailing  list  is  absolutely 
necessary  to  the  success  of  the  business, 
and,  more,  every  employee  here  who 
draws  wages  helps  to  keep  five  other 
persons  from  actual  want  and  misery." 
After  a  little  more  kindly  encouragement 
along  that  line,  the  president  told  me,  his 
clerk  returned  to  his  work  with  an  en- 
larged vision  of  his  own  usefulness. 
These  stimulations  may  well  occupy  a 
large  portion  of  the  time  of  the  man  in 
command,  leaving  minor  tasks  to  be  per- 
formed by  others. 

A  SUMMARY  OF  DEPARTMENTAL  FUNC- 
TIONS 

To  obtain  the  best  results  the  executive 
head  of  a  business  should  have  no  special 

[15] 


Essential  Elements  of  Business  Character 

duties  to  perform.  His  is  the  task  of  or- 
ganizing and  perfecting  the  brain  ma- 
chine of  which  he  is  the  governor. 

The  man  in  charge  of  production — call 
him  vice-president,  general  manager  or 
superintendent — should  understand  that 
end  of  the  business  better  than  any  other 
man  obtainable.  Such  a  man  will  get 
the  goods  out  in  the  least  possible  time 
at  the  lowest  possible  cost. 

Matched  against  him  will  be  the  man  in 
charge  of  the  distribution  of  the  product. 
He  may  be  styled  vice-president,  "  head 
of  the  selling  department "  or  "  chief  sales- 
man"— the  name  does  not  count.  The 
product  must  move,  and  he  is  the  man  to 
do  it,  and  do  it  at  a  profit,  provided  the 
cost  is  right.  A  salesman  of  the  right 
calibre  will  keep  ahead  of  production  if 
possible — and  he  will  make  it  possible. 

These  two  men  should  work  in  har- 
monious antagonism ;  the  salesman  to 
get  orders  booked  in  advance  of  pro- 
duction, and  the  producer  striving  to 
catch  up  and  even  pass  the  salesman  in 
order  that  he  may  not  rest  on  his  oars. 
[16] 


Business  Organization 


The  executive  can  watch,  direct  and  en- 
courage this  friendly  battle  for  supremacy, 
shaping  the  policy  wisely  and  keeping 
the  rivalry  up  to,  but  within,  proper  limits. 

Financing  the  business  involves  many 
things  unknown  to  any  but  the  mind 
trained  in  such  matters.  Credit,  dis- 
counts, collection,  providing  working  capi- 
tal, placing  of  bank  accounts,  insurance, 
taxes,  and  many  other  interesting  topics, 
are  best  handled  by  men  of  special 
training. 

Frequently  the  president  attends  to 
much  of  this  detail,  but  it  is  much  bet- 
ter if  he  manages  his  organization  in 
such  a  way  that  most  of  these  details  can 
be  turned  over  to  specialized  assistants. 

Eliminate  from  the  task  of  the  execu- 
tive head  of  the  business  the  many  de- 
tails that  others  can  as  well,  if  not  better, 
perform,  and  see  what  a  vast  vista  of 
possibilities  opens  to  him. 

With  time  to  think  out  the  policies  of 
the  business  in  all  of  their  aspects,  can 
you  doubt  that  he  will  not  measurably 
increase  its  usefulness  and  emoluments  ? 
[*7] 


Essential  Elements  of  Business  Character 

I  say  with  all  confidence  that  he  will, 
provided  he  possesses  those  basic  quali- 
ties without  which  a  man  may  not  win 
honourable  success.  What  these  qualities 
are,  and  who  win  in  business  I  have  tried 
to  show  in  the  following  chapters. 


[18] 


II         4 
BUSINESS  KNOWLEDGE 

A  WEALTHY  hat  manufacturer 
who  within  the  short  period  of 
twenty  years  has  risen  from  the 
bench  to  a  commanding  position  in  his 
line  of  business,  when  asked  to  advise 
young  men  how  to  get  on  in  business, 
said :  "  If  I  should  select  the  rule  most 
faithfully  observed  by  me,  it  would  be, 
1  Always  keep  your  information  account 
open:  " 

This  somewhat  whimsical  remark  is 
most  expressive  of  the  type  of  mind 
usually  found  at  the  head  of  a  great  busi- 
ness. Is  it  not  curious  that  the  men  of 
large  affairs  are  usually  most  eager  for 
information?  Small  men  are  perfectly 
satisfied  with  what  they  know  about  their 
business,  or,  if  not  completely  satisfied, 
allow  themselves  to  become  so  immersed 
in  the  flood  of  routine  daily  details  that 
their  capacity  for  mental  application  to 

[19] 


Essential  Elements  of  Business  Character 

any   subject    not    immediately   pressing 
upon  them  is  extremely  limited. 

When  we  read  or  hear  about  a  man 
whose  business  visibly  grows  year  by 
year,  or  one  who  is  called  to  more  and 
more  important  positions,  we  are  apt  to 
regard  his  success  as  being  the  result  of 
some  fortunate  influence,  or  perhaps  a. 
lucky  chance.  Sometimes  a  feeling  of 
envy  takes  possession  of  our  hearts  as 
we  see  our  acquaintance  rise  in  the  busi- 
ness world.  Why  should  he  have  been 
selected  to  receive  the  favours  of  fortune 
and  we  neglected,  to  remain  on  the  lower 
plane  ?  Why  is  it  that  we  have  never 
had  an  opportunity  to  change  our  office 
or  employment  for  a  better  one  ?  With- 
out doubt  there  are  some  undersized  ex- 
amples of  good  fortune  occupying  posi- 
tions of  responsibility  who  have  been 
pushed  to  the  top  through  the  assistance 
of  family  connections.  Such  men  are  able 
to  hold  purely  nominal  positions  indefi- 
nitely ;  but  let  us  look  about  us  and  see 
if  we  can  point  to  a  single  example  of  a 
large  enterprise — public,  quasi-public,  or 

[20] 


Business  Knowledge 


private — which  has  been  managed  for 
any  considerable  time  by  a  brainless  prod- 
uct of  fortunate  circumstances. 

The  word  "  brains  "  is  used  in  business 
to  indicate  that  mental  ability  which  en- 
ables the  possessor  to  grasp,  analyze,  and 
act  upon  facts  before  him.  While  the 
tendency  to  brains  may  be  inherited  by  a 
man  from  his  ancestors,  mediately  or  im- 
mediately, the  actual  brains,  in  the  sense 
in  which  the  term  is  used  in  business,  can- 
not be  derived  from  any  source  other  than 
attentive  reading,  instruction,  and  obser- 
vation of  facts  and  men. 

It  would  be  interesting,  if  it  were  possi- 
ble, to  gather  together  a  hundred  of  the 
presidents  of  the  great  corporations  in 
our  country  in  one  huge  room  and  ask 
them  to  tell  us  how  they  acquired  the 
ability  to  command  the  positions  to  which 
they  have  been  exalted.  Would  not  our 
stenographic  notes  of  this  mighty  meet- 
ing form  a  complete  university  course  in 
business  instruction  ?  By  a  hundred  dif- 
ferent routes  these  mighty  powers  have 
reached  the  council  of  business  kings. 
[21] 


Essential  Elements  of  Business  Character 

While  no  two  chapters  in  our  thus  com- 
pletely formed  business  library  would 
contain  repetitions,  excepting  such  as 
would  be  useful  for  emphasis,  we  could 
not  fail  to  observe  running  all  the  way 
through  each  chapter  and  each  book  con- 
tinuous evidence  of  an  eager  search  for 
knowledge  on  the  part  of  those  whose 
struggles  are  thus  recorded.  The  useful 
information  or  business  knowledge  ac- 
quired by  each  of  these  masters  has  not 
been  scrambled  or  gathered  in  any 
' '  happy-go-lucky  "  or  "  hit-or-miss  " 
way.  We  would  be  impressed  with  the 
thought  that  each  advance  from  the  bot- 
tom to  the  top  has  been  carefully  pre- 
pared by  anticipated  study  and  intense 
research. 

Thoughtless  inclination  leads  us  to  be- 
lieve that  business  men  pick  up  their  edu- 
cation as  they  go  along,  much  in  the  same 
manner  as  a  traveller  snatches  a  hasty 
lunch  at  a  wayside  station.  Few  of  us 
would  think  of  a  business  man  as  possess- 
ing an  educated  intellect.  This  attribute 
is  generally  assigned  to  men  of  promi- 

[22] 


Business  Knowledge 


nence  in  the  learned  professions.  Such 
are,  admittedly,  natural  students.  We 
expect  to  hear  that  they  have  burned  the 
midnight  oil.  A  business  man,  however, 
is  mistakenly  thought  to  have  acquired 
his  knowledge  only  by  hard,  practical, 
current  knocks.  Those  who,  through 
friendship  or  close  business  associations, 
possess  an  intimacy  with  the  growing 
great  men  know  their  secret.  They  are 
convinced  that  these  hundred  presidents 
have  applied  themselves  to  the  acquisi- 
tion of  knowledge  with  an  earnestness 
not  surpassed  by  any  body  of  professors. 
They  have  been  advanced  from  grade  to 
grade  because  they  have  faithfully  conned 
the  lessons  of  the  higher  grade  and  have 
earned  their  right  to  promotion. 

A  little  boy  in  his  father's  home  was 
standing  beside  some  visitors  who  were 
being  shown  various  matters  of  interest 
in  the  house.  The  party  had  come  to  an 
old  Civil  War  engraving  illustrating  a 
military  camp  of  his  father's  regiment. 
Some  of  the  soldiers  were  engaged  in 
various  outdoor  games,  while  others  were 
E'«3] 


Essential  Elements  of  Business  Character 

playing  cards.  All  of  the  men  shown  in 
the  engraving  were  plainly  "  off  duty." 

"  Where  is  your  father?"  asked  one  of 
the  visitors  of  the  little  boy,  who  proudly 
replied,  after  a  moment's  hesitation  : 

"  In  his  tent,  of  course,  studying  how  to 
be  promoted." 

Our  hundred  presidents,  before  they 
became  such,  learned  well  the  rudiments 
of  their  several  callings,  and  more — they 
learned  the  duties  of  the  position  above 
them.  Do  you  think  that  any  of  these 
men  squirmed  easily  into  their  advancing 
offices?  If  any  of  them  have  roughly 
brushed  their  fellows  aside  to  make  room 
for  their  more  rapid  progress,  that  is  a 
personal  matter  of  morals.  If  they  have 
seized  the  prizes  a  little  too  quickly,  to  the 
prejudice  of  others,  they  may  have  com- 
mitted a  moral  wrong ;  but,  mark  you ! 
the  hard  work  of  preparation  for  the  in- 
creasing responsibility  furnished  an  outfit 
against  which  no  retarding  movement 
would  avail.  Nothing  could  have  pre- 
vented them  from  ultimately  reaching  the 
goal  of  their  ambitions.  Whether  or  not 
[24] 


Business  Knowledge 


any  of  these  men  have  come  to  regard 
that  which  they  have  done  as  wrong  and 
subsequently  striven  to  right  it,  so  far  as 
the  world  is  concerned  they  are  undeni- 
ably great ;  and  they  have  achieved  their 
positions  of  power  by  means  of  no  magic 
— other  than  that  of  educated  work. 

Another  curious  thing  which  will  be 
noted  in  a  frank  discussion  by  these  men 
is  that  they  will  not  acknowledge  that 
they  have  yet  finished  their  education. 
Select  any  one  at  random,  and  ask  him 
what  work  he  does  outside  of  his  business 
hours.  Is  it  too  venturesome  to  say,  in 
advance,  that  the  one  man  of  the  hundred 
whom  you  have  selected  as  a  test  case 
will  act  as  a  spokesman  for  the  entire 
party  without  dissent  when  he  says  that 
he  is  constantly  reading  and  studying  and 
discussing  business.  His  mental  pores 
are  kept  ever  open,  ready  to  absorb 
knowledge  of  anything  pertaining  to 
commerce  in  general  and  his  own  busi- 
ness in  particular.  He  is  assured  that  to 
go  on  he  must  keep  constantly  in  touch 
with  the  ever-changing  relations  between 

[25] 


Essential  Elements  of  Business  Character 

his  business  and  the  aggregate  of  all 
business  of  a  similar  kind,  so  that  matters 
may  be  adjusted  to  the  better  advantage 
of  the  particular  enterprise  which  he  com- 
mands. 

Does  a  man  who  stays  in  small  affairs 
engage  his  mind  with  such  problems? 
Does  the  average  man  do  anything  tend- 
ing to  attract  attention  from  those  higher 
up  ?  Does  the  average  man  try  to  raise 
himself  above  the  average  ability  ?  No. 
He  remains  on  the  lower  rungs  of  the 
ladder ;  and  his  position  is  stationary  be- 
cause he  is  wholly  occupied  in  holding  on 
to  his  present  place. 

Clerks  in  offices,  banks,  and  stores  com- 
plain that  their  living  expenses  are  ever 
increasing  while  their  incomes  remain  un- 
changed. What  do  they  do  to  earn  an 
increased  income  ?  If  they  perform  their 
duties  faithfully  and  well  and  exhibit 
themselves  to  their  proprietors  as  good 
clerks,  good  clerks  they  will  remain. 
Few  business  men  will  remove  a  man 
from  a  position  which  he  is  rilling  accepta- 
bly for  the  mere  purpose  of  experimenting 

[26] 


Business  Knowledge 


with  him  in  some  other  place.  Why 
should  they  ?  The  clerk  who  is  doing  his 
duty  faithfully  and  well,  and  nothing  more 
than  his  duty,  will  never  be  arbitrarily  re- 
moved to  the  higher  office.  That  might 
be  against  the  best  interests  of  the  pro- 
prietor. 

Here  and  there  is  a  man  who  has  his 
eyes  open  to  the  great  truth  that  the  pos- 
session of  knowledge  takes  a  man  out  of 
the  ordinary  and  puts  him  above  the  av- 
erage ;  and  he  knows  that  a  man  must  be 
above  the  average  to  rise.  Such  clerks 
study  how  to  be  promoted. 

Proprietors  of  small  business  affairs 
frequently  feel  that  the  larger  concerns 
are  gradually  driving  them  out  of  busi- 
ness. It  is  undoubtedly  true  that  in  some 
cases  the  development  of  an  industry  into 
a  huge  corporation  tends  to  narrow  the 
field  of  the  smaller  man  producing  similar 
goods ;  but  in  many  cases  where  the  large 
combinations  have  endeavoured  to  crush 
out  the  small  rival  the  big  ship  has  unex- 
pectedly struck  a  snag.  The  giant  has 
met  the  thoroughly  equipped  youth. 
[27] 


Essential  Elements  of  Business  Character 

There  is  in  New  York  a  man  who  man- 
ufactures a  product  ninety  per  cent,  of 
which  is  controlled  by  a  trust.  This  in- 
dependent, though  pressed,  will  not  join 
the  consolidation,  and  time  after  time  ef- 
forts have  been  made  to  dislodge  him 
from  his  trade.  He  manufactures  an  ar- 
ticle with  a  brand  that  has  become  known 
among  a  certain  class  of  people  who  will 
accept  no  substitute.  He  is  alert  and 
vigorous,  watching,  studying,  to  counter- 
act a  subtle  move  by  the  giant  corpora- 
tion. Now  the  big  men  realize  that,  with 
all  their  capital,  they  have  met  an  equal. 
He  has  been  offered  an  exalted  position 
and  a  price  for  his  business  over  and 
above  its  real  worth  as  an  income  pro- 
ducer, because  he  is  equipped  and  ready 
to  meet  any  man  they  have  in  the  great 
organization  face  to  face  on  a  level  of 
ability. 

When  a  business  man  finds  himself 
being  crowded  by  competition,  fair  or  un- 
fair, the  hard  condition,  instead  of  dis- 
couraging him,  should  operate  to  stimu- 
late an  increase  in  his  brain  capital  that 
[28] 


Business  Knowledge 


the  deficiency  in  money  capital  may  be 
completely  offset. 

Those  who  look  about  them  with  the 
light  of  intelligence  in  their  eyes  know 
that  the  men  who  are  going  forward  are 
students  in  their  business.  Each  has  his 
own  private  university  course  mapped  out 
from  the  beginning.  Every  opportunity 
to  increase  his  business  and  reduce  the 
expense  of  obtaining  and  despatching  it 
finds  him  ready  to  appropriate  the  ad- 
vantage. He  is  always  prepared.  His 
knowledge  of  business  and  all  that  per- 
tains to  it  is  acquired  by  much  hard  work 
in  fields  not  bounded  by  his  own  purchases 
and  sales. 

He  becomes  known  among  his  business 
friends  generally,  and  among  his  com- 
petitors particularly,  as  a  man  of  distinc- 
tion in  his  line  of  business.  He  is  an 
acknowledged  peer.  If  combinations  or 
consolidations  or  reorganizations  of  the 
industry  in  which  he  is  engaged  be  under 
way,  it  is  recognized  that  this  peer  must 
be  consulted.  He  cannot  be  left  out  of 
account.     If  he  is  not  treated  with  due 

[29] 


Essential  Elements  of  Business  Character 

consideration,  he  may  completely  check- 
mate the  best-planned  move.  The  man 
who  knows  his  business  is  armour-clad.  No 
power  can  successfully  assail  him.  When 
foes  call  upon  him  to  surrender,  he  is 
ready  with  the  famous  response  to  the 
effect  that  he  "has  only  begun  to  fight." 

Men  fail  because  they  do  not  know 
their  business.  What  game  is  there  that 
a  man  can  play  successfully  without  un- 
derstanding it  ?  What  athletic  contest  is 
there  that  a  man  can  enter  with  any  rea- 
sonable hope  of  success  without  intense 
preparation  ?  Open,  notorious  defeats  of 
this  kind  are  ridiculed.  These  men  should 
have  known  better.  They  ought  to  have 
been  trained.  But  it  may  take  years  for 
a  man  to  fail  in  business.  He  may  be 
able  to  conceal  his  inability  for  an  indefi- 
nite period. 

Many  even  land  in  the  bankruptcy 
court  because  they  have  not  given  proper 
attention  to  their  information  account. 
Yards  upon  yards  of  stenographic  reports 
of  examinations  of  bankrupts  form  a  con- 
tinuous journal  of  confessions,  proving 
[30] 


Business  Knowledge 


the  truth  of  this  thought.  Many  of  these 
manufacturers  honestly  believe  themselves 
masters  in  the  art  of  producing  certain 
articles,  but  the  records  are  against  them. 
Some  weakness,  some  lack  of  knowledge, 
some  incorrect  information,  opened  a 
seam  ;  and,  as  a  natural  consequence,  the 
ship  sank  into  deep  waters.  Sometimes 
these  failures  furnished  to  the  unfortunate 
business  men  the  needed  lesson  that 
pointed  the  way  to  a  better  understand- 
ing of  their  business. 

What  confidence  is  reposed  in  a  man 
who  inspires  us  with  his  business  ability 
even  before  he  performs  the  act  of  service 
contemplated  !  While  we  are  yet  negoti- 
ating with  him  we  are  influenced  by  his 
utterances,  for  we  feel  sure  that  they 
come  straight  from  the  centre  of  the 
magic  circle  of  knowledge.  This  man 
has  been  initiated.     He  knows  ! 

The  beauty  of  this  principle  of  business 
knowledge  is  that  every  man  and  woman 
may  have  it  if  they  will  study  their  busi- 
ness from  the  bottom  up.  While  few  rise 
to  the  top,  the  others  are  not  arbitrarily 
[3i] 


Essential  Elements  of  Business  Character 

kept  down.  The  key  is  in  the  possession 
of  every  man  and  woman.  That  only  a 
few  open  the  door  to  the  golden  treasury 
is  merely  another  way  of  saying  that  only 
a  few  have  sufficient  ambition.  All  de- 
sire it,  of  course.  They  want  it ;  but 
they  do  not  want  it  or  desire  it  enough. 

The  man  behind  the  counter  or  the 
desk  or  in  command  of  a  business  finds 
little  time  for  reading  during  business 
hours.  The  daily  business  in  hand  occu- 
pies his  time  fully,  but  his  opportunities 
for  study  of  men  and  facts  are  constantly 
hovering  around  him  during  the  course 
of  the  hour,  the  day,  the  year. 

One  has  but  to  open  his  intelligence  to 
see  the  business  knowledge  ever  present, 
awaiting  only  his  sincere  call.  Sincerity 
of  purpose  will  point  to  the  occupation  of 
much  of  his  spare  time  in  reading  news- 
papers, trade  and  other  magazines  and 
books,  all  carefully  selected  to  meet  his 
particular  wants. 

What  a  difference  there  is  in  the  infor- 
mation gathered  from  the  same  sources  by 
different  men  !  In  reading,  how  many  of 
[32] 


Business  Knowledge 


us  in  every  thousand  extract  other  than 
the  surface  meaning  of  the  things  written 
on  the  printed  page  ?  To  a  few  the  mes- 
sage conveyed  may  be  of  deep  signifi- 
cance. Many  acts  or  spoken  words,  ap- 
pearing in  the  black  type  before  us,  carry 
swiftly  to  the  mind  of  the  searcher  infor- 
mation which  may  have  no  connection 
whatever  with  the  article  containing  the 
particular  acts  or  words  recorded. 

The  business  student,  as  distinguished 
from  the  casual  reader,  eagerly  searches 
for  principles  rather  than  mere  facts., 
Many  facts  must  be  memorized,  of  course, 
but  the  master  mind  will  endeavour  to 
solve  the  underlying  principles,  feeling 
sure  that  once  in  possession  of  the  under- 
standing of  the  rules  governing  matters 
of  business,  he  will  be  able  to  understand 
any  set  of  facts  presented  to  him.  Fur- 
thermore, a  complete  knowledge  of  prin- 
ciples enables  one  materially  to  adjust 
facts  in  the  making.  It  would  be  inter- 
esting, if  possible,  to  outline  the  various 
sources  of  information  which  a  man 
should  consult  outside  of  his  ordinary 
[33] 


Essential  Elements  of  Business  Character 

daily  employment,  but  it  will  be  remem- 
bered that  our  hundred  presidents  have 
come  to  their  present  educated  positions 
through  different  routes. 

There  is  no  " five-foot  library"  for  the 
business  man.  Help  can  be  given  by  the 
friend  who  has  studied  the  principles  un- 
derlying all  business  transactions,  but  each 
reference  library  must  be  selected  to  fit 
exactly  the  requirements  of  the  business 
student.  With  the  definite  object  of 
equipping  his  mind  to  more  important 
fields  of  activity  and  emoluments,  the 
business  man  will  carefully  and  deliber- 
ately seek  to  extract  the  essentials  of 
business  by  the  most  economical  and 
practical  methods  from  the  unlimited 
sources  at  hand. 


[34] 


Ill 

BUSINESS  ENERGY 

TWO  days  prior  to  that  on  which 
a  large  note  of  his  company 
would  fall  due  the  treasurer  ap- 
plied to  the  bank  for  a  renewal.  He  was 
reminded  by  the  cashier  that  the  com- 
pany had  been  "  carried  for  some  time." 
The  cashier  then  suggested  that  serious 
efforts  be  made  by  the  treasurer  to  reduce 
the  amount  of  money  borrowed  at  the 
bank.  "  We  are  now  making  arrange- 
ments with  a  capitalist  to  energize  our 
plant,  and  we  expect  during  the  next 
month  to  be  in  a  position  to  take  up  all 
of  our  loans,"  replied  the  treasurer. 

This  treasurer  uttered  a  thought  which 
finds  a  lodging-place  in  the  minds  of 
many  manufacturers.  Is  it  not  natural 
for  business  men  to  regard  the  ability  to 
command  capital  as  the  prime  requisite  to 
a  successful  business  operation  ?  "  Give 
us  plenty  of  the  '  sinews  of  war,'  and  we 
[35] 


Essential  Elements  of  Business  Character 

will  do  the  rest,"  they  feel  like  saying, 
when  hampered  in  their  operations,  ap- 
parently for  lack  of  capital. 

Of  course  all  business  operations  re- 
quire capital,  and  in  every  case  sufficient 
funds  must  somehow  be  provided  if  the 
operation  is  to  continue.  It  is  not  in- 
tended to  suggest  anything  contrary  to 
this  well-established  principle.  No  one 
doubts  that  money  will  do  almost  any- 
thing, but  without  trained  judgment  and 
experienced  management  it  will  run  a 
factory  so  long  only  as  it  can  be  poured 
into  the  treasurer's  office.  In  the  process 
of  operating  the  plant  by  means  of  large 
capital  the  works  may  even  take  on  an 
appearance  of  being  energized  ;  but  when 
the  easy  funds  have  been  exhausted,  the 
former  dead-and-alive  condition  inevi- 
tably returns. 

Absence  of  real  power,  executive  ability, 
in  an  organization  cannot  be  concealed. 
Even  sterling  gold  cannot  be  substituted 
for  sterling  ability. 

What  is  this  real  power,  this  energy  ? 
Go  into  that  factory  across  the  street  and 

[36] 


Business  Energy 


look  about.  You  will  not  need  to  have 
the  answer  to  the  inquiry  written  in  set 
words  and  phrases.  Interested  activity 
is  written  on  every  face  seen,  from  the 
office  boy  who  meets  you  at  the  door  to 
the  president  who  greets  you  in  his  pri- 
vate office.  The  hum  of  the  swiftly  mov- 
ing machinery  is  but  a  tame  representa- 
tion of  the  moving  force  everywhere 
manifested.  You  do  not  have  to  be  told 
that  business  is  being  successfully  con- 
ducted in  that  establishment.  The  presi- 
dent himself  appears  to  you  as  the  incar- 
nation of  business.  In  him  you  sense  the 
source  of  a  potent  force  enlivening  and 
enthusing  all  with  whom  he  comes  di- 
rectly or  indirectly  in  contact.  Yet  how 
calm  and  deliberate  are  his  acts — his 
directions  to  those  about  him !  Does 
this  man  lean  upon  money  as  an  ener- 
gizer  ?  Most  assuredly  not.  He  can  get 
anything  he  wants,  including  sufficient 
capital  for  his  purposes. 

Now  go  down  the  street  to  that  other 
mill  and  see  whether  you  can  detect  the 
difference  in  the  atmosphere  between  the 
[37] 


Essential  Elements  of  Business  Character 

two.  Yes,  you  feel  the  difference  even 
before  you  can  accustom  your  mental 
vision  to  the  lesser  light.  In  place  of  the 
attentive  office  boy,  you  first  see  upon 
entering  the  office  a  young  woman  with 
a  pencil  in  her  mouth  trying  to  operate 
the  telephone  with  one  hand  while  ad- 
justing her  hair  with  the  other.  All  of 
the  clerks  are  either  absorbed  in  their 
work  or  idly  standing  about  talking. 
After  what  seems  a  long  time  to  you  be- 
fore attention  is  finally  given,  you  get 
into  the  president's  room,  and  there  you 
find  your  friend  at  a  desk  heaped  with  a 
confusion  of  letters  and  papers  of  all  sizes 
and  shapes,  trying  to  dictate  to  a  sten- 
ographer at  his  side,  while  two  clerks  are 
standing  before  his  desk  seeking  atten- 
tion. One  of  these  wants  to  know  whether 
an  order  amounting  to  an  insignificantly 
small  sum  shall  be  shipped  without  more 
credit  information  concerning  the  buyer  ; 
while  the  other  clerk  brings  a  message 
from  the  superintendent  of  the  mill  to  the 
effect  that  more  coal  must  soon  be  ob- 
tained or  the  mill  will  have  to  slow  down. 

[38] 


Business  Energy 


While  you  are  standing  there  the  tele- 
phone on  the  president's  desk  rings,  and 
his  utterances  of  welcome  to  you  are 
broken  off  as  he  puts  his  mouth  to  the 
transmitter.  His  remarks  indicate  that  a 
customer  of  the  company  is  complaining 
about  some  delayed  shipment  of  goods. 

Here  again  you  find  concentrated, 
forceful  energy,  but  of  what  a  different 
quality  !  This  man  possesses  and  shows 
energy  in  every  inch  of  him.  It  sticks 
out  in  every  word,  act,  and  motion ;  but 
from  the  impressions  you  receive  regard- 
ing his  assistants,  this  energy,  this  force, 
apparently  exists  in  him  alone.  There  is 
no  doubt  that  he  has  plenty  of  it,  but  the 
difference  between  him  and  your  other 
friend  is  that  this  man  cannot  communi- 
cate his  force  to  others.  It  is  bottled  up 
in  him  !  His  personal  push  keeps  things 
moving,  but  at  what  cost,  what  waste  of 
power  ! 

You   feel   like    saying  to  him :  "  You 

human  dynamo,  how  many  times  during 

the   day   do   you   feel   like    kicking  the 

whole  outfit  about  you  into  the  street? 

[39] 


Essential  Elements  of  Business  Character 

Hanging  about,  as  they  do,  dependent 
upon  you,  receiving  continuously,  but 
giving  back  no  real  help,  you  feel  that 
nobody  in  the  establishment  takes  any 
real  interest  in  the  work.  Nobody  tries  to 
take  some  of  the  pack  off  your  shoulders." 

Does  not  a  comparison  of  these  two 
men  disclose  the  main  secret  of  successful 
operation?  Is  it  not  true  that  no  one 
man  can  carry  the  whole  burden  forever 
on  his  shoulders  ?  No  amount  of  money 
will  permanently  energize  such  a  plant. 

Unless  a  manager  can  awaken  in  each 
and  all  of  his  assistants  a  sufficient  amount 
of  dynamic  force  to  set  them  going  of 
themselves,  he  will  always  have  before 
'him  a  huge  and  well-nigh  hopeless  task. 
This  initiative  must  come  from  within. 
It  cannot  be  hammered  in  from  without. 
Push  and  pull  as  much  as  we  like,  we 
cannot  force  unwilling  human  beings  into 
a  proper  performance  of  their  several 
functions.  While  movements  produced 
by  them  upon  application  of  outside  force 
may  give  an  appearance  of  effective 
labour,  such  is  merely  a  surface  appear- 

[40] 


Business  Energy 


s 


ance.  If  you  examine  well  the  conduct 
of  those  who  patiently  suffer  themselves 
to  be  pushed  and  pulled,  you  will  find 
wasted  power  in  every  act,  in  every 
thought,  in  every  word. 

Employers  of  men  and  women  know 
better  than  any  one  can  tell  them  that 
the  product  of  unwilling  service  can- 
not be  compared  with  that  of  willing 
service.  Those  who  have  tried  many 
ways  and  means  fully  comprehend  that  in 
energizing  an  organization  something 
vastly  more  important  than  money  must 
be  acquired.  Indeed,  it  is  one  of  the 
very  virtues  of  a  rounded-out  and  efficient 
self-moving  organization  that  less  money 
is  required,  because  less  useless  money  is 
passed  through  the  hopper  and  lost  in 
wasted  energy. 

It  is  very  hard  to  describe  the  esprit  de 
corps  of  a  military  company  in  action,  yet 
the  presence  of  this  unified  spirit  is  so 
obvious  that  we  see  it  in  the  very  expres- 
sion on  the  faces  of  the  men.  Men  ex- 
perienced in  handling  bodies  or  com- 
panies or  societies  of  men  and  women 

[41] 


Essential  Elements  of  Business  Character 

know  that  the  ability  to  impart  to  others 
^  the  impulse  to  be  useful  is  the  most  valu- 
able asset  the  executive  head  of  any  or- 
ganization can  possess.  When  he  suc- 
ceeds in  getting  everybody  all  the  way 
down  the  line  pushing  and  pulling  to- 
gether, he  has  accomplished  the  one  great 
essential  thing. 

Business  ought  not  to  be  a  source  of 
worriment,  a  continual  hourly  harassment, 
a  lifelong  burden  and  care.  If  it  is  per- 
formed properly  and  easily,  it  ought  to  be 
a  source  of  pleasure  to  the  man  engaged 
in  its  daily  acts.  Much  of  this  real  pleas- 
ure is  missed  by  those  who  are  unable  to 
surround  themselves  with  willing  assist- 
ants. 

Some  of  our  friends  will  say  that  all 
this  sounds  very  delightful,  and  that  they 
would  enjoy  it  very  much  if  business 
could  be  carried  on  in  that  way — the  way 
we  suggest — but  it  is  absolutely  imprac- 
ticable because  we  cannot  get  the  kind  of 
men  described  as  necessary  for  our  assist- 
ants. In  reply,  we  are  led  to  ask  our 
friends  whether  they  have  ever  really  tried 
[42] 


Business  Energy 


to  readjust  the  various  duties  that  must  be 
performed  by  some  one. 

It  may  be  that  lying  dormant  in  the  peo- 
ple about  us  there  is  just  the  ability 
needed.  Let  us  study  the  men  and 
women  in  our  employ  carefully  and  sin- 
cerely with  but  one- tenth  of  the  concentra- 
tion applied  in  the  effort  to  understand  our 
customers.  The  needed  faculties  may 
all  be  there,  undiscovered,  because  un- 
searched  for.  In  the  heart  of  every  one 
of  them,  from  our  brother  officers  down  to 
the  porter,  there  is,  or  surely  ought  to  be, 
in  existence  a  germ  of  a  desire  to  perform 
useful  work  for  you.  It  may  lie  buried 
too  deeply  to  show  on  the  surface ;  but, 
depend  upon  it,  somewhere  in  pretty 
nearly  every  human  being  is  the  seed  of 
use,  perhaps  awaiting  only  a  touch  to  be- 
gin an  active  development. 

It  does  not  necessarily  follow  that  the 
best  service  which  those  about  us  can 
render  is  the  best  of  the  particular  kind 
that  we  require.  Where  hundreds  of  mis- 
fits in  life  are  recorded  among  the  notables, 
many  thousands  exist  unknown  among 
[43] 


Essential  Elements  of  Business  Character 

the  common  people.  Roughly  classed 
into  "  labourers,"  "  mechanics,"  "  clerks," 
"  professional  men,"  and  "  bankers,"  there 
may  be  thrown  people  who  exist  in  those 
groups  without  possessing  an  adequate 
understanding  of  the  nature  of  their  real 
calling,  or  why  they  are  there.  If  this  is 
true  generally,  it  may  be  particularly  true 
of  our  plant.  Consequently  many  adjust- 
ments may  have  to  be  made  in  the  men 
and  women  connected  with  our  concern 
before  we  can  get  the  machine  properly 
"  geared  up."  We  may  have  to  take  and 
give  more  or  less  severe  doses  of  physic ; 
but  be  assured  that  even  heroic  measures, 
if  found  necessary,  will  be  worth  while. 

The  human  body  is  an  organization,  a 
machine.  The  head  may  retain  full  pos- 
session of  its  faculties — in  other  words, 
remain  thoroughly  alive — after  the  entire 
body  is  paralyzed.  How  earnestly  such 
a  man  desires  to  get  his  arms  and  legs 
working — to  be  alive  all  over  and  in  ^very 
part !  What  a  difference  there  is  between 
a  completely  alive  business  organization 
and  a  partially  paralyzed  one  ! 
[44] 


Business  Energy 


When  men  leave  their  homes  in  the 
morning  and  go  to  their  business,  they 
find  themselves  in  surroundings  so  differ- 
ent, and  sometimes  so  much  less  enjoy- 
able, that  they  grow  in  time  to  think  of 
business  as  an  abstract  thing,  separate 
and  apart  from  their  home  life,  their  real 
life.  Some  even  distinguish  business 
from  the  men  engaged  in  conducting  it. 
Can  we  separate  an  act  from  the  actor  so 
that  the  act  may  perform  itself?  If  it 
were  possible  to  accomplish  such  a  feat 
of  legerdemain,  we  might  by  another 
turn  of  the  wrist  construct  a  species  of 
business  that  would  run  alone,  that  would 
continue  to  operate  without  the  sup- 
posedly necessary  dynamic  force.  But 
the  idea  that  business  is  anything  differ- 
ent from  what  our  thoughts,  words,  and 
actions  make  it  would  not,  after  due 
thought,  be  received  seriously  by  many. 

The  intimate  relation  between  life  and 
business  seems  to  lead  us  to  a  considera- 
tion and  conviction  that  the  right  thing  to 
do  with  our  business  is  to  energize  the 
people  connected  with  it. 
[45] 


Essential  Elements  of  Business  Character 

Perhaps  it  may  have  appeared  from 
these  simple  suggestions  that  the  arousing 
of  the  dormant  energy  in  our  organiza- 
tion is  not  a  hard  thing  to  do.  It  is  hard 
in  the  sense  that  it  is  always  hard  to 
break  up  settled  habits.  It  is  hard  to 
make  up  our  minds  to  do  something  dif- 
ferent from  that  to  which  we  are  daily 
accustomed.  It  is  hard  because  we  hate 
even  to  consider  the.  giving  up  of  control ; 
but  when  our  resolution  is  once  firmly 
fixed,  perhaps  the  major  portion  of  our 
particular  problem  is  already  solved. 

It  is  suggested  that  one  of  the  practical 
things  to  do  in  the  beginning  is  to  arrange 
that  all  possible  details,  now  binding  our 
hands  and  feet  like  shackles,  be  delegated 
to  our  assistants.  It  seems  necessary  to 
do  this  in  the  beginning  in  order  that  we 
may  find  time  to  perfect  our  more  elab- 
orate plans  ;  but  at  once  fears  arise  that 
no  one  can  be  found  in  the  organization 
who  can  attend  to  these  details  in  the 
efficient  way  in  which  we  have  been  ac- 
customed to  handle  them.  Immediately 
pictures  of  hundreds  of  disastrous  situa- 

[46] 


Business  Energy 


tions  flash  before  the  mind  as  the  presi- 
dent sees  the  amateurish  bungling  by 
others  of  those  details  so  familiar  to  him. 
It  is  hard  to  contemplate  the  mistakes  that 
inevitably  follow  the  shifting  of  responsi- 
bility to  another's  shoulders. 

Unless  we  can  look  beyond  the  imme- 
diate consequences  of  those  possible  errors 
and  see  in  the  loss  a  larger  gain,  it  will 
not  be  easy  for  us  to  favour  any  slacken- 
ing of  our  attention  of  the  smaller  matters* 
the  daily  aggregate  of  which  drives  us 
like  slaves.  On  the  other  hand,  if  we  can 
catch  a  glimpse  of  the  larger  opportuni- 
ties afforded  by  a  fully  organized  energy, 
we  may  become  convinced  that  nothing 
should  prevent  us  from  making  a  begin- 
ning, from  inaugurating  earnest  effort  to 
get  everybody,  from  top  to  bottom,  push- 
ing and  pulling  together. 


[47] 


IV 

BUSINESS  RELIABILITY 

AS  he  was  about  to  leave  the  court- 
house a  message  was  handed  to 
a  young  attorney  requesting  his 
presence  in  the  office  of  a  well-known 
financier.     He  went  there  at  once. 

"  Mr.  A ,"  said  the  financier,  "  how 

would  you  like  to  become  vice-president 

and  attorney  for  the  B Manufacturing 

Company?" 

"  Any  association  with  you,  sir,  would 
be  a  pleasure,"  replied  the  young  lawyer 
without  hesitation. 

The  financier  explained :  "  My  as- 
sociates tell  me  that  you  have  a  good 
knowledge  of  business  and  accounts,  as 
well  as  ability  as  a  lawyer ;  and,  more 
important  still,  you  are  thoroughly  reli- 
able. We  want  you  to  take  charge  of 
the  office  affairs  of  the  company,  consult- 

[48] 


Business  Reliability 


ing,  of  course,  with  the  company's  gen- 
eral counsel  in  any  legal  matters  of  im- 
portance. The  salary  is  $5,000  per  year 
Will  you  take  it?  " 

"  When  do  I  begin  work?  "  laconically 
replied  the  young  man. 

A  few  other  details  were  arranged,  and 
he  went  home,  hardly  daring  to  believe 
in  his  "  good  luck  "  until  he  had  actually 

begun  his  duties  in  the  office  of  the  B 

Company. 

Does  this  story  sound  like  romance? 
Let  me  assure  you  that  it  is  based  upon  a 
real  occurrence  which  happened  only  re- 
cently. 

Do  not  think  this  an  isolated  case. 
There  are  to-day  many  financial  institu- 
tions and  industrial  plants  whose  elderly 
presidents  desire  to  be  relieved  from  their 
responsibilities  so  soon  as  suitable  young 
men  can  be  found  for  their  offices.  Thus, 
emerging  from  the  rank  and  file  of  busi- 
ness and  professional  struggles,  many 
candidates  for  higher  honours  are,  with- 
out their  own  knowledge,  closely  scruti- 
nized for  evidences  of  presidential  timber. 
[49] 


Essentia]  Elements  of  Business  Character 

Look  at  the  history  of  any  one  of  a 
number  of  the  young  men  who  have  re- 
cently been  "brought  out"  as  presidents 
of  large  corporations.  Does  not  our  curi- 
osity become  stimulated  into  hopeful  en- 
deavour? Few  of  these  men  have  been 
required  to  mount  round  after  round  of 
the  ladder  they  began  to  climb.  Many 
of  them,  through  exhibition  of  extra  abil- 
ity, have  been  suddenly  transplanted  from 
the  occupations  in  which  their  training 
was  acquired  to  the  heads  of  the  corpora- 
tions which  they  have  been  called  upon 
to  lead. 

Another  capitalist  said  to  a  friend  the 
other  day  :  "  Do  you  know  that  the  hard- 
est part  of  my  work  consists  in  securing 
brainy  assistants.  I  tell  you  that  I  have 
enough  undeveloped  matters  in  my  office 
to  employ  twenty  bright  men,  but  I  can't 
find  them." 

If  the  younger  men  engaged  in  busi- 
ness or  professions  could  only  realize  the 
extent  to  which  they  are  needed  and  are 
being  watched  by  the  prominent  men  in 
the  community,  with  what  care  they 
[5o] 


Business  Reliability 


would    attend    to    their    daily    business 
transactions ! 

EVERY  BUSINESS  ENGAGEMENT  SHOULD 
BE  FAITHFULLY  KEPT 

No  one  habit  is  harder  to  form  than 
the  prompt  keeping  of  business  engage- 
ments. If  a  business  man  has  an  ap- 
pointment with  another,  nothing  should 
be  allowed  to  prevent  a  punctual  appear- 
ance at  the  time  and  place  fixed  for  the 
meeting.  When  unavoidable  accidents 
prevent,  nothing  short  of  immediate  and 
full  explanation  and  apology  will  remove 
the  unsatisfactory  impression  created  by 
the  broken  engagement. 

This  habit  of  "  being  there  on  time  "  is 
especially  important  when  the  engage- 
ment is  between  a  young  business  man 
and  a  man  of  affairs ;  for  this  meeting, 
unknowingly  to  the  young  man,  may 
have  been  arranged  by  the  elder  man  as 
a  test  of  character.  He  may  consider  the 
failure  to  arrive  as  an  evidence  of  defi- 
ciency in  reliability.  Once  disappointed, 
it  is  hard  to  overcome  the  distrust,  un* 
[5i] 


Essential  Elements  of  Business  Character 

duly  magnified  by  so  slight  an  occurrence 
perhaps,  but  still  firm  enough  to  resist 
dislodgment. 

FAILURE     TO     DELIVER     GOODS     WHEN 
PROMISED 

Another  form  of  broken  engagements 
frequently  retards  the  career  of  a  business 
man.  How  exasperating  to  have  a  man- 
ufacturer or  merchant  fail  in  his  promise 
to  deliver  merchandise  at  the  specified 
time,  thus  upsetting  our  entire  calcula- 
tions in  planned  events  !  How  hardly  do 
we  in  future  give  him  our  entire  confi- 
dence ! 

Many  young  men  do  not  fully  compre- 
hend the  slow  process  of  character-build- 
ing. One  dishonoured  promise  may,  un- 
less clearly  excusable,  knock  down  at  a 
blow  the  structure  which  has  taken  years 
to  erect.  If  they  could  but  see  how  much 
easier  it  is  to  destroy  than  to  create  repu- 
tations for  reliability,  every  man  would 
give  as  constant  heed  to  the  exact  per- 
formance of  each  and  every  verbal  con- 
tract or  engagement  as  most  men  do  to 

[52] 


Business  Reliability 


those  which  can  be  enforced  against  them 
in  law. 

With  what  admiration  we  all  contem- 
plate the  man  whose  "  word  is  as  good  as 
his  bond."  When  such  a  man  speaks, 
our  pencils  fly  quickly  back  into  our 
pockets.  We  have  no  need  for  a  signed 
memorandum  of  the  transaction.  If  he 
says,  "  I  will  take  it,"  or  "  You  may  count 
on  me,"  you  know  that  when  the  time 
arrives  for  him  to  "  make  good "  he  will 
be  ready  for  you.  Did  this  enviable  rep- 
utation attach  itself  to  him  in  one  notori- 
ous occurrence  ?  Not  so  easily  do  men 
yield  up  their  business  confidence.  Rep- 
utations for  the  possession  of  many  other 
traits  of  character  may  be  quickly  earned 
by  the  willing  or  foisted  upon  the  unwill- 
ing man,  but  the  reputation  for  reliability 
is  of  slow  growth.  You  may  be  sure  that 
he  who  possesses  this  valuable  treasure 
has  nurtured  and  guarded  it  carefully 
from  youth  up.  Its  possession  inspires 
the  confidence  of  all  those  who  have  ex- 
perienced business  contact  with  its  pos- 
sessor. They  do  not  have  to  watch  him ! 
[53] 


Essential  Elements  of  Business  Character 

DEPENDABLE  MERCHANDISE 
Goods  manufactured  or  sold  by  the 
man  of  reliability  may  be  depended  upon 
to  turn  out  in  the  exact  quality,  size, 
or  weight  as  marked  on  the  outside  of 
the  package.  Advertisements  of  such 
men  are  read  in  the  belief  that  the  goods 
may  be  purchased  in  faith  that  what  is 
said  about  them  is  the  truth.  If  we  go 
into  the  store  of  a  reliable  merchant  and 
meet  with  some  seeming  trickery  on  the 
part  of  his  clerks,  we  know  that  we  have 
but  to  get  the  ear  of  the  proprietor  to 
have  the  wrong  set  right;  and  he  will 
thank  us  for  calling  attention  to  the  error. 
Sometimes  our  unfortunate  experiences 
in  dealing  with  the  very  large  stores  lead 
us  to  believe  that  the  proprietors  are  in- 
different to  this  quality.  If  we  remember 
that  the  growth  of  a  business  may  become 
so  rapid  as  to  outstride  its  organization, 
we  know  that  the  fault  lies  in  the  limit  of 
human  capacity  for  personal  supervision 
of  all  details  by  the  proprietor.  In  but 
few  of  such  cases  the  owner  himself 
strives  to  win  your  confidence,  although 
[54] 


Business  Reliability 


he  may  not,  as  yet,  have  been  successful 
in  training  his  clerks. 


REPRESENTATIVES  OF  RELIABLE  BUSI- 
NESS MEN 

With  what  assurance  does  the  attorney, 
clerk,  salesman,  or  agent  of  a  man  whose 
reputation  for  reliability  is  established  go 
forth  to  represent  his  principal !  What  a 
difference  between  his  view  of  business 
transactions  and  that  of  the  representa- 
tive of  a  man  upon  whom  dependence 
cannot  be  placed !  Far  away  from  the 
proprietor  of  the  business  as  he  may  go, 
the  representative  of  the  reliable  man 
knows  what  to  do  in  any  question  involv- 
ing right  or  wrong.  By  those  unwritten, 
but  none  the  less  binding,  instructions  he 
knows  that  his  chief  would  have  him  de- 
cide the  matter  in  accordance  with  right 
principles.  His  path  is  much  smoother 
than  that  of  the  representative  who  never 
knows  what  his  principal  will  do  in  any 
given  question.  How  much  easier  to 
learn  and  be  guided  by  simple  rules  es- 
[55] 


Essential  Elements  of  Business  Character 

tablishing  reliability  than  to  attempt  to 
follow  the  intricate  paths  of  chicanery  ! 

REPUTATION   AT   BANK 

Methods  of  business  to-day  are  such 
that  it  is  difficult  for  any  business  man  to 
avoid  borrowing  money,  either  directly 
from  a  bank  or  by  means  of  "  merchan- 
dise "  notes.  Most  men  attend  to  such 
obligations  when  due,  even  though  ex- 
tensions of  time  must  be  asked,  but  too 
many  business  men  are  careless  in  this 
respect.  In  numerous  banks  on  any 
given  day,  if  you  could  look  over  the 
bank  examiner's  shoulder,  you  would  find 
several  overdue  notes  classified  as  "  dis- 
honoured paper,"  which  have  been  neg- 
lected through  mere  carelessness.  In 
many  cases  the  makers  of  the  notes  will 
go  to  the  bank  in  a  day  or  two  and  either 
pay  the  full  amount  thereof  or  effect  re- 
newals. In  cases  of  pure  neglect  the 
bank  sustains  no  loss,  but  the  business 
man  who  does  not  attend  promptly  to 
such  matters  suffers  a  severe  loss — a  loss 
of  reputation  for  reliability.  When  any 
[56] 


V 


Business  Reliability 


man  finds  that  he  will  not  be  able  to  pay 
his  note  in  full,  he  should  go  to  the  bank 
several  days  before  the  note  becomes  due 
and  explain  his  position  frankly.  If  be- 
lieved, and  entitled  to  a  renewal  with  or 
without  a  payment  on  account,  he  will 
obtain  the  accommodation.  In  any 
event,  by  giving  the  matter  his  prompt 
attention  his  reputation  as  a  man  who 
will  do  his  best  will  remain  untarnished. 


MERCANTILE  CREDIT  BASED   LARGELY 
UPON   RELIABLE   HABITS 

Besides  the  mere  statements  of  a  man's 
net  worth,  important  consideration  is 
often  given  by  mercantile  agencies  to 
his  business  reputation  for  reliability. 
Three  extracts  from  reports  of  men 
each  conducting  a  business  of  moder- 
ate dimensions  may  be  interesting  as 
examples  illustrating  this  thought.  In 
each  of  these  three  cases  the  financial 
strength  or  net  worth  taken  by  itself 
would  not  entitle  him  to  the  good  rating 
given. 

[571 


Essential  Elements  of  Business  Character 

A—"  The  opinion  is  expressed  by  those 
knowing  him  that  he  would  not  be 
liable  to  contract  any  personal  in- 
debtedness which  he  did  not  see  his 
way  clear  to  meet  at  maturity." 

B — "Our  relations  with  him  have  been 
such  that  we  are  not  familiar  with 
his  affairs  in  detail,  but  we  believe 
him  to  be  a  reliable  man." 

C — "  Among  the  trade  he  stands  well,  and 
his  bank  speaks  well  of  him.  He 
can  be  relied  on  to  do  what  he 
promises." 

Who  would  think  that  the  hard-headed 
sleuths  of  a  mercantile  agency  would 
deem  these  things  worthy  of  report !  Yet 
those  familiar  with  "  credits  "  know  the 
intrinsic  value  of  business  reliability  and 
gladly  welcome  reports  including  obser- 
vations of  that  nature. 

CONTRACTORS'  PECULIAR  TEMPTATIONS 
When  a  customer  can  see  and  handle 
a  definite  article,  he  can  protect  himself  in 
a  measure  from  deceit,  but  in  any  form 
of  business  involving  construction  to  be 
performed  after  the  contract  is  made  the 

[58  j 


Business  Reliability 


buyer  must  rely  more  or  less  upon  the 
contractors'  reliability.  Special  opportu- 
nities for  taking  advantage  of  the  buyer's 
ignorance  leads  many  contractors  to  in- 
dulge in  "  tricks  of  the  trade,"  which  may 
often  be  carried  through  without  the  prac- 
tice of  "  legal  "  fraud.  Many  things  arise 
in  the  course  of  a  building  operation 
easily  interpretable  and  chargeable  as 
extras  by  a  sharp  contractor  to  which  a 
reliable  man  would  attend  without  ques- 
tion as  coming  within  the  spirit,  if  not 
the  letter,  of  the  terms  of  the  contract. 

To  a  decorating  contractor  came  an 
applicant  for  the  position  of  foreman.  "  I 
will  guarantee  that  you  will  get  '  extras  ' 
amounting  to  at  least  twenty  per  cent, 
more  than  your  contracts  on  any  job  I 
have  charge  of,"  said  he.  The  con- 
tractor, without  hesitation,  said  :  "  You 
are  just  the  man  I  am  not  looking  for. 
This  is  a  reliable  firm." 

Go  back  to  the  man  who  taught  you 
that,  foreman,  and  compare  his  business, 
from  all  angles,  with  that  of  the  firm  who 
rejected  you. 

[59] 


Essential  Elements  of  Business  Character 

ALLOWING  USE  OF  HIS  NAME  BY  OTHERS 
Business  men  who  jealously  guard  their 
reputations  in  their  own  affairs  too  often 
slacken  their  watchfulness  when  their 
names  are  used  in  connection  with  pro- 
motions. One  of  the  most  flagrant  cor- 
poration swindles  practiced  in  recent  years 
was  made  possible  by  prominent  business 
men  who  allowed  their  names  to  be  used 
as  directors  of  the  company.  Known  to 
be  reliable,  the  public  thought  the  com- 
pany with  which  they  were  connected 
must  be  reliable.  Not  one  of  these  direct- 
ors made  a  dollar  in  the  swindle,  but 
their  reputations  for  reliability  rightly  suf- 
fered among  the  thousands  of  those  who 
lost  their  savings. 

Another  picture  comes  to  mind  in 
which  I  see  an  entirely  different  type  of 
director.  He  sits  on  the  boards  of  half  a 
dozen  large  financial  institutions,  in  not 
one  of  which  does  any  other  director  as- 
sume that  this  man  will "  go  along  "  with- 
out having  the  matter  fully  explained, 
nor  unless  it  meets  with  his  approval, 
s   mai 

[60] 


Business  Reliability 


affairs,  private  or  public,  he  can  be  trusted 
to  do  all  that  he  says,  or  leads  people  to 
believe,  he  will  do. 

u  GOOD  WILL  " 

What  a  capital  building  power  is  relia- 
bility !  The  reliable  business  man  is 
secretly  accumulating  property,  other  than 
the  dollars  shown  on  his  books,  which 
can  some  day  be  turned  into  money. 
This  hidden  capital  is  called  "good  will," 
and  it  is  well  worth  working  for. 

"  Good  will "  in  a  successful  business  has 
a  much  more  tangible  value  than  is  com- 
monly realized.  When  a  man  sells  his 
business,  he  expects  to  be  paid  well  for 
this  asset,  although  it  is  not  shown  in  the 
inventory,  yet  many  scarcely  think  of  the 
means  by  which  it  is  created.  "  Good  will " 
is  acquired  only  by  those  who  patiently, 
day  by  day,  adhere  to  simple  business 
principles,  one  of  which  was  so  well  ex- 
pressed by  a  successful  manufacturer  who 
was  asked  for  a  definition  of  reliability  : 
11  When  a  man  does  what  he  agrees  to— 
that's  reliability  ! " 

[61] 


Essential  Elements  of  Business  Character 

STUDYING  RELIABLE  MEN 
A  manufacturer  who  has  risen  rapidly 
into  a  position  of  national  importance  was 
once  asked,  "  How  did  you  acquire  a 
knowledge  of  the  business  so  quickly  ?  " 
His  answer  was  short  and  to  the  point, 
11 1  didn't  study  the  business,  I  studied 
its  president."  This  answer,  intended  to 
be  partly  humorous,  contained  a  germ 
of  serious  instruction.  Knowledge  of 
the  business  itself  must  be  carefully  ac- 
quired by  any  one  who  would  advance, 
but  that  is  not  all.  To  the  men  at  the 
head  of  the  business  we  should  go  to  learn 
of  basic  business  qualities.  As  we  study 
them  we  can  scarcely  fail  to  observe  that 
of  the  many  priceless  possessions  of  our 
great  business  men  none  is  regarded  more 
highly  than  the  unpurchasable  reputation 
for  reliability. 


[62] 


V 

BUSINESS  ECONOMY 

DRIVING  along  the  main  street  of 
a  small  city  in  which  he  lived,  a 
retired  sugar  magnate  suddenly- 
stopped  his  horse,  handed  the  reins  to  a 
friend  who  sat  beside  him,  jumped  to  the 
ground,  and  picked  up  a  new  red  brick 
which  he  placed  in  his  carriage.  He  then 
resumed  his  seat  and  drove  on. 

"  What  are  you  going  to  do  with  that 
brick  ?  "  asked  his  friend. 

"  Take  it  home  and  add  it  to  my  pile 
for  repairs  when  needed,,,  replied  the 
sugar  magnate. 

He  explained  further  that  it  had  been 
his  habit  for  years  to  pick  up  good,  serv- 
iceable bricks,  either  thrown  away  or 
dropped  carelessly  on  the  street ;  that 
during  the  course  of  a  year  the  accumu- 
lated bricks  saved  him  considerable  out- 
lay in  repairs  to  the  various  properties 
owned  by  him. 

[63] 


Essential  Elements  of  Business  Character 

11  Besides,  I  hate  to  see  any  good  mate- 
rial wasted,"  said  he. 

This  incident  aptly  illustrates  the  sav- 
ing tendency  of  the  older  business  men  as 
contrasted  with  many  wasteful  habits  of 
the  younger  men.  It  is  very  rarely  that 
we  see  a  young  business  man  preserve 
pieces  of  wrapping  paper,  nails,  or  twine 
received  on  packages  during  the  course 
of  business.  The  prevailing  spirit  seems 
to  induce  the  thought  that  the  preserva- 
tion of  such  small  incidental  materials 
consumes  time  entirely  out  of  proportion 
to  the  value  of  the  thing  saved  ;  but,  like 
all  general  rules,  it  is  carried  too  far  by 
many  young  men  who  perhaps  could  not 
employ  their  time  to  better  advantage 
than  in  saving  good,  though  minor, 
materials  which  would  otherwise  be  lost. 

TIME  SAVING  VS.  MATERIALS  SAVING 
It  is  quite  likely  that  the  man  who  origi- 
nated the  thought  that  he  could  not  af- 
ford to  spend  time  on  such  matters  found 
the  principle  correct  as  applied  to  him- 
self ;  but,  like  all  principles  catering  to 

[64] 


Business  Economy 


indifference  regarding  details,  the  idea  is 
too  readily  adopted  by  many  young  men 
who  can  ill  afford  its  practice. 

The  maxim,  "  Penny  wise,  pound  fool- 
ish," has  been  misunderstood,  to  the  un- 
doing of  many  brilliant  young  men.  But 
aside  from  the  mere  question  of  the  actual 
value  involved  in  any  specific  incident  of 
saving,  the  inculcation  in  the  minds  of  all 
business  men  of  the  principles  of  economy 
as  applied  to  all  of  their  business  acts  is 
of  extreme  importance. 

Young  men  are  too  ready  to  adopt 
what  may  be  termed  the  vices  of  rich 
men  ignoring  the  basic  qualities  upon 
which  those  men  built  success.  When  a 
man  arrives  at  a  state  of  affluence,  he 
may  readily,  and  without  any  appreciable 
loss,  discard  some  of  his  economic  prin- 
ciples as  applied  to  minor  details  ;  but  it 
may  be  noted  with  advantage  that  the 
men  who  are  now  in  positions  of  promi- 
nence are  thoroughly  imbued  with  the 
spirit  of  economy,  which  they  constantly 
practice,  although  there  may  be  a  slough- 
ing off  as  to  some  of  the  minor  details. 
[65] 


Essential  Elements  of  Business  Character 

Unfortunately,  the  exceptional  incidents 
showing  the  neglect  of  smaller  matters 
are  taken  by  the  young  business  man  as 
evidences  that  all  small  savings  may  be 
disregarded. 

Care  is  much  harder  to  cultivate  than 
carelessness,  which,  if  not  checked  in 
time,  crystallizes  indifference  to  small 
economies  all  the  way  through  business 
transactions.  Many  men  possessing  gen- 
ius and  push,  who  would  otherwise  be 
successful,  through  wasteful  habits  fail  to 
gain  the  recognition  to  which  they  think 
they  are  entitled. 

ECONOMY  NOT  NECESSARILY  FRUGALITY 
We  have  heard  many  tales  of  the  al- 
most miserly  habits  of  some  of  our 
wealthy  men.  Such  should  not  be  se- 
lected as  examples  for  study.  The 
wealthy  sugar  magnate  referred  to  in  the 
incident  of  the  brick  was  a  very  liberal 
spender  of  money  in  the  comforts  of  his 
home  and  of  his  family.  The  idea  is, 
not  that  a  man  must  be  stingy  or  miserly, 
but  that  he  should  not  allow  anything  to 
[66] 


Business  Economy 


|  be  wasted  which  cant  with  a  reasonable 
exercise  of  effort  y  be  saved.  Parsimony  is 
mean  and  sordid  ;  economy  is  admirable. 

SAVING  CONSIDERED  AS  PROFIT  ON 
INVESTMENT 

That  the  general  tendency  among 
young  men  in  business  is  against,  rather 
than  towards,  saving  is  shown  in  the  life 
insurance  statistics,  wherein  it  is  start- 
lingly  set  forth  that  the  man  who  does  not 
acquire  the  habit  of  putting  some  of  his  in- 
come away  until  he  has  reached  the  age  oj 
forty  can  rarely  hope  successfully  to  culti- 
vate economical  habits  after  that  date. 
What  I  wish  to  emphasize  here  is  not 
merely  the  desirability  of  cultivating  the 
thrifty  habit  in  itself,  but  rather  that  the 
economical  spirit  as  evidenced  in  small 
things  permeates  the  entire  business 
career  of  a  man,  often  marking  the  suc- 
cessful man  as  distinguished  from  the 
failure. 

Another  illustration  of  the  thought  car- 
ried into  smaller  things  is  furnished  in  the 
example  set  by  the  president  of  a  large 
[67] 


Essential  Elements  of  Business  Character 

national  bank  in  Philadelphia  who  was 
sitting  beside  a  young  friend  in  a  street 
car  one  day  when  the  conductor  came 
through  to  collect  the  fares.  The  young 
man  handed  out  a  five-cent  piece,  while 
the  bank  man  carefully  reached  into  an 
inner  pocket  and  produced  a  ticket  which 
he  had  purchased  at  the  rate  of  six  for 
twenty-five  cents.  As  a  gentle  reproof  to 
his  young  friend  the  bank  man  said : 

"  I  buy  these  tickets  because  I  do  not 
know  of  any  better-paying  safe  invest- 
ment. I  make  twenty  per  cent,  on  my 
investment  of  a  quarter  of  a  dollar." 

The  judgment  evidenced  by  the  presi- 
dent in  this  small  matter  is  indicative  of 
a  fixed  quality  in  the  type  of  men  who 
get  along  in  business.  Ripe  judgment  in 
important  matters  does  not  spring  instan- 
taneously into  the  mind.  It  must  have 
humble  beginnings  and  grow  to  matu- 
rity. The  young  man,  to  acquire  fitness, 
must  keep  the  critical  eye  of  economy 
ever  open,  and  never  at  any  stage  of 
progress  allow  it  to  become  dulled. 
The  men  who  have  gained  prominence 
[68] 


Business  Economy 


in  the  industrial  world  study  matters  of 
economy  very  earnestly.  They  thor- 
oughly understand  the  importance  of 
exercising  keen  judgment  in  the  use  of 
materials  and  labour,  in  the  expenses  of 
selling  merchandise  and  conducting  the 
office,  and  last,  but  not  least,  in  disposing 
of  their  own  time. 

Perhaps  one  of  the  most  noticeable 
forms  of  waste  of  time  is  seen  in  the  rou- 
tine employment  and  payment  of  the 
wages  of  employees.  Lack  of  intelligent 
direction  evidenced  here,  as  compared 
with  the  careful  estimate  and  inquiry  con- 
cerning the  purchase  of  machinery  equip- 
ment, is  startling.  When  machines  are 
needed,  every  effort  is  made  to  obtain  the 
tool  exactly  adapted  to  the  purpose  for 
which  it  is  intended.  When  installed,  it 
is  watched  with  care,  cleaned,  oiled,  and 
repaired  with  the  conscious  purpose  of 
prolonging  its  life  and  usefulness. 

With  few  exceptions,  the  money  an- 
nually expended  in  the  purchase  of  ma- 
chinery in  the  aggregate  constitutes  a 
mere  bagatelle  compared  with  the  annual 

[69] 


Essential  Elements  of  Business  Character 

pay-roll.  Yet  men  are  too  often  treated 
as  a  mass,  while  the  machines  receive 
special  individual  care.  And  how  few  em- 
ployees are  selected  with  regard  to  their 
special  fitness  for  the  jobs  for  which  they 
are  employed  1  What  a  vast  amount  of 
power  is  lost  through  carelessness  in  this 
respect ! 

UNECONOMICAL  CLERKS 
Let  us  look  around  the  office  or  store 
and  cast  the  critical  eye  of  economy  over 
the  clerks.  Where  can  we  go  to  find  bet- 
ter examples  of  unintelligently  wasteful 
performance  than  in  our  bookkeepers? 
The  inheritance  of  ages  has  fixed  upon 
most  bookkeepers  unnecessary  and  waste- 
ful habits  which  retard,  instead  of  help, 
the  business. 

A  credit  insurance  man,  discussing  with 
the  proprietor  of  a  mill  the  advantage  of 
the  protection  afforded  by  his  company, 
in  order  to  ascertain  the  amount  of  pre- 
mium on  a  proposed  policy,  asked  the 
proprietor,  "  How  much  have  your  losses 
amounted  to  through  bad  debts  during  the 
[70] 


Business  Economy 


past  five  years?"  The  mill  owner  called 
his  bookkeeper,  to  whom  the  question  was 
repeated.  He  replied  to  the  effect  that  it 
would  take  him  some  time  to  ascertain 
the  amount,  and  he  could  not  tell  just 
how  long  it  would  take.  He  was  set  to 
work  on  the  problem,  and  consumed  a 
week  in  digging  out  the  figures,  which,  if 
they  had  been  intelligently  placed  on  the 
books  originally,  would  have  been  accessi- 
ble with  the  expenditure  of  a  few  minutes 
only.  Perhaps  this  seems  an  exaggerated 
case.  If  so,  let  any  merchant  or  manu- 
facturer who  has  not  given  considerable 
study  to  the  bookkeeping  of  his  office,  test 
the  condition  of  his  own  books  by  asking 
for  some  information  of  a  vital  nature  and 
noting  the  time  required  by  the  book- 
keeper to  furnish  the  facts.  There  are 
exceptional  offices  where  such  matters 
have  been  economically  planned ;  but  I 
venture  to  say  that  many  readers  of  this 
article  will,  if  they  try  the  experiment  sin- 
cerely, find  in  their  offices  practical  illus- 
trations of  the  need  for  more  economy. 
The  manager  of  a  large  office  told  me 
[7i] 


Essential  Elements  of  Business  Character 

the  other  day  that  he  was  considering  the 
organization  of  a  school  for  his  clerks  in 
which  efforts  would  be  made  to  teach  them 
to  think.  "  I  realize,"  said  he,  "  that  an 
immense  amount  of  time  could  be  saved 
if  I  could  get  my  clerks  actually  to  think 
about  what  they  are  doing  and  why  they 
are  doing  it ;  whether  what  they  are  doing 
is  necessary  and  whether  their  time  can 
be  better  employed."  The  stimulation  of 
the  initial  mental  process  in  subordinates 
is  one  of  the  hardest  problems  of  a  busi- 
ness man.  Like  machines,  the  human 
body  can  be  adapted  to  the  performance 
of  almost  any  regularly  repeated  motion. 
Such  exercises  of  the  muscles  are  spoken 
of  as  mechanical  performances,  many  of 
them  being  learned  so  well  that  thought 
seems  unnecessary.  But  men  are  differ- 
ent from  machines  in  that  with  thought 
they  will  make  fewer  mistakes ;  without 
thought  they  may  commit  costly  errors. 

FACTORY  WASTE 
A  visit  to  the  average  manufacturing 
plant  will  fill  one  with  the  same  sense  of 

[72] 


Business  Economy 


wasteful  performance  that  he  sees  in 
the  office.  The  eye  of  the  master 
studying  economy  in  the  resources  at 
his  command  will  flash  searching  glances 
now  here,  now  there,  in  the  effort  to 
discover  wasteful  effort  that  may  be 
eliminated. 

At  one  side  of  the  elevator  near  the 
doorway  in  a  large  loom  manufacturing 
plant  stood  a  dray  from  which  were  being 
unloaded  materials  to  be  conveyed  by  the 
elevator  to  the  floor  above.  Just  beyond 
this  truck  two  other  drays  stood  idly 
awaiting  their  turn.  "Why  not  knock 
out  another  door  at  the  other  side  of  the 
elevator  and  get  those  teams  busy?" 
was  suggested.  The  answer  is  typical  of 
the  result  of  crystallized  custom :  "  We 
never  thought  of  that,"  which,  being  inter- 
preted into  other  language  more  signifi- 
cant, means,  "  We  have  never  brought  the 
economical  eye  to  bear  upon  that  situa- 
tion." This  is  only  one  illustration  of 
thousands  of  opportunities  for  saving 
waste  in  time  and  material  which  con- 
stantly press  closely  around  and  upon  the 
[73] 


Essential  Elements  of  Business  Character 

business  man,  who  has  but  to  open  his 
critical  eye  to  observe  them. 

A  wealthy  meat-packer  said  only 
recently  that  the  profits  in  his  beef  busi- 
ness consist  entirely  in  what  he  is  able  to 
save  in  materials  formerly  wasted.  The 
small  butcher  throws  away  what  the  large 
butcher  turns  into  money.  The  means 
employed  by  the  latter  could  not  be 
adopted  by  all  small  butchers,  but  the 
thought  that  waste  may  be  eliminated 
and  savings  effected  through  intelligent 
study  of  materials  such  as  are  neglected 
by  others  is  good  enough  for  universal 
application. 

In  some  lines  of  business  high-priced 
chemists  and  engineers  are  employed  for 
the  specific  purpose  of  finding  cheaper 
substitutes  for  more  costly  materials,  and 
devising  more  economical  processes. 

MANY   OPPORTUNITIES   FOR  EXERCISING 
ECONOMY 

An  illustration  of  the  economy  that  can 
be  effected  by  the  rearrangement  of  ma- 
chinery is  furnished  in  an  incident  which 
[74] 


Business  Economy 


occurred  in  a  mill  where  long  strips  of 
cloth  were  required  to  be  sewn  in  "  triple- 
ply,"  the  methods  involving  several  differ- 
ent stitching  processes,  performed  sepa- 
rately, one  after  the  other,  on  differ- 
ent machines  by  different  operators.  A 
bright  young  foreman  rearranged  these 
stitching  machines  in  tandem  form  so 
that  the  three  operations  can  now  be  per- 
formed at  the  same  time  on  the  same 
cloth  and  a  much  larger  amount  of  manu- 
factured goods  made  immediately  possible. 
The  president  of  the  company  expressed 
his  enthusiasm  in  the  following  words  : 

"  I'll  tell  you  that  was  a  grand  good 
thing !  Each  of  the  ninety  girls  in  that 
room  now  takes  home  with  her  more 
money  every  week  ;  but  the  best  part  of 
it  is,  she  leaves  us  a  much  larger  profit 
than  we  had  before — so  we  are  all  happy." 

EMPLOYERS   HAVE  NO   RIGHT  TO   EX- 
PECT BEST  SERVICE  WITHOUT 
PAYING  FOR   IT 

What  does  the  average  business  man 
do  to  extract  the  greatest  amount  of  use- 
[75] 


Essential  Elements  of  Business  Character 

ful  labour  from  his  employees  ?  Human 
beings  are  very  much  alike,  so  far  as 
basic  principles  are  concerned,  in  what- 
ever station  of  life  they  may  be  placed. 
Let  us  take  our  own  feelings,  for  instance. 
Are  we  conducting  business  purely  as 
philanthropists  ?  Or  do  we  conduct  our 
business  or  occupation  largely  in  the 
hope  or  expectation  of  gain  ?  How  hard 
would  we  labour  if  the  emolument  derived 
would  constitute  but  a  mere  living  wage|^"v j. 
Would  we  work  ten,  twelve,  or  eighteen^  " 
hours  a  day  at  our  business  if  we  could 
extract  no  more  than  bread  and  butter 
from  it?  The  broad-minded  business 
man  can  see  that  a  greater  amount  of 
profit  can  be  derived  from  intelligently 
directed  and  interested  human  machines 
than  can  from  any  system  in  which  a 
group  of  human  beings  is  considered 
merely  as  a  mass. 

The  idea  of  practical  economy  makes  it 
necessary  that  there  should  be  no  waste 
in  the  acts  of  any  employees.  The  great- 
est amount  of  service  possible  to  extract 
should  be  obtained  from  the  labourer.    By 

[  76  ] 


Business  Economy 


putting  him  in  a  position  wherein  he  can 
measure  the  value  of  his  interested  serv- 
ices in  definite  terms  of  money  he  will 
not  only  create  a  larger  wage  for  himself 
but  he  will  at  the  same  time  work  a  cor- 
responding increase  in  the  revenue  to  the 
manufacturer.  This  is  not  merely  theo- 
retical sociology.  It  is  practical  business 
economy. 

Believe  me,  these  essentials  of  business 
character  are  possessed  by  living  men  who 
have  demonstrated  that  they  are  work- 
able, practical  principles. 


1771 


VI 

SYSTEM  IN  BUSINESS 

AS  organization  consists  of  men, 
system  consists  of  ways  and 
means.  A  perfect  organization 
is  one  in  which  the  men  fully  possess  the 
qualities  which  I  have  attempted  to  de- 
scribe in  the  preceding  chapters.  Or- 
ganization and  system  run  all  the  way 
through  every  business  story,  and  they 
sometimes  appear  inseparable.  In  the  first 
chapter  somewhat  more  emphasis  was 
placed  upon  organization.  Now  let  us 
look  into  the  matter  of  system  a  little  more. 
Many  men  think  that  business  systems 
consist  of  statements,  books  and  blank 
forms.  From  such  we  hear  a  good  deal 
about  "cost  systems,"  "filing  systems," 
"  loose-leaf  systems,"  and  other  terms  in- 
dicating things  purely  external  as  com- 
pared with  the  more  vital  matters  of 
business.  The  real  conception  of  system 
exists   in  the  idea  of  organized   effort. 

[78] 


System  in  Business 


When  men  gather  together  for  the  ac- 
complishment of  any  purpose,  they  know 
that  unless  they  proceed  in  an  orderly, 
systematic  way,  the  fruit  of  their  endeav- 
ours will  be  dissipated.  For  this  reason 
the  assembly  is  organized  into  a  coherent 
body,  and  rules  are  adopted  to  promote 
the  effectiveness  of  its  objects. 

BUSINESS  CANNOT  EXIST  WITHOUT 
SYSTEM 

A  business  body  can  no  more  exist 
without  a  system  than  can  any  other 
group  of  separate  individuals.  Each  and 
every  business  concern,  whether  owned 
by  an  individual,  partnership  or  corpora- 
tion, must  without  question  be  conducted 
under  some  sort  of  system.  Most  suc- 
cessful men  carefully  arrange  every  de- 
tail of  their  business  so  that  each  act  will 
take  its  place  in  the  prepared  plan.  In 
such  an  organization  every  pound  of 
energy  is  expended  in  furthering  the 
objects  of  its  existence.  No  labour  is 
misdirected.  The  president,  the  foreman, 
the  salesman,  the  mechanic,  all  work  in 
[79] 


Essential  Elements  of  Business  Character 

harmony  towards  the  goal  of  successful 
enterprise.  All  of  the  numerous  and  in- 
tricate parts  of  the  business  machine  ap- 
pear in  their  proper  places,  and  all  of  those 
parts  perform  the  functions  for  which,  by 
training  and  ability,  they  are  best  fitted. 

In  perfecting  the  organization  every 
individual  connected  therewith  is  intelli- 
gently placed  where  his  services  will  best 
aid  the  operation  of  the  whole  business. 

System,  if  rightly  understood,  becomes 
of  much  greater  interest  as  a  study  when 
the  debased  use  of  the  term  is  discarded. 
Let  us  first  think  of  system  as  economically 
regulated  force  ;  after  this  has  been  adapted 
to  our  plant,  matters  of  books  and  ac- 
counts may  be  easily  handled. 

Every  human  being  is  an  example  of 
system,  or  organized  energy.  The  human 
body  has  been  created  through  a  divinely 
organized  system.  To  obtain  from  the 
body  the  greatest  amount  of  work  and 
happiness  it  must  be  kept  clean  and 
healthy.  While  it  may  become  important 
at  the  proper  time  to  discuss  various 
kinds  of  clothing  and  conveniences,  these 
[80] 


System  in  Business 


are  details  of  small  consequence  compared 
with  knowledge  of  the  functions  of  the 
perfect  human  body,  its  powers,  necessi- 
ties and  limitations. 

EXAMINE  THE  ADMINISTRATION   METH- 
ODS FIRST,  THEN  THE  RECORDS 

How  to  best  direct  human  activity,  is 
the  important  thing  to  know.  Any  time 
spent  in  a  study  of  minor  matters  to  the 
neglect  of  the  main  principles  of  human 
life  and  energy  seems  foolish,  indeed,  to 
the  intelligent.  Just  as  ridiculous  is  the 
concentration  of  the  mind  on  mere  ques- 
tions of  size,  number,  kinds  and  colour 
of  books,  papers  and  forms,  to  the  neglect 
of  the  main  principles  of  business  organi- 
zation. This  view  of  the  subject  of  sys- 
tem readily  leads  one  into  the  belief  that 
the  first  study  should  be,  not  how  a  pur- 
chase should  be  recorded  so  much  as  to 
whether  the  purchase  is  necessary \  and,  if 
so,  whether  wisely  purchased.  A  serious 
consideration  should  be  given,  not  so 
much  as  to  how  the  time  of  a  labourer 
should  be  recorded  as  to  how  that  time 
[81] 


Essential  Elements  of  Business  Character 

may  be  made  most  productive.  The  study 
of  how  an  order  should  be  entered  on  the 
books  is  not  as  serious  as  the  study  of 
how  to  get  the  order.  The  method  by 
which  a  charge  for  a  consummated  sale 
should  be  recorded  is  not  so  important  as 
it  is  to  obtain  a  fair  price  and  convert  the 
charge  into  cash.  These  are  but  a  few 
examples  of  the  vital  matters  of  system, 
compared  with  which  bookkeeping  meth- 
ods in  themselves,  while  important,  are 
secondary. 

All  records  of  a  business  are  important 
and  should  be  plain,  clear  and  accurate  ; 
but  the  accounts  are  but  footprints  of  the 
living  transactions  which  should  form  the 
first  object  of  systematic  efforts.  If  the 
business  is  intelligently  directed  its  prog- 
ress will  be  reflected  in  swift,  straight  foot- 
prints. From  an  analysis  of  the  records 
already  made  we  can  extract  much  useful 
information  regarding  errors  made  in  the 
past,  which  may  be  of  material  aid  in  cor- 
recting future  steps,  but  the  point  that  I 
want  to  bring  out  clearly  is  that  the  first 
study  of  a  business  man  should  be  con- 

[82] 


System  in  Business 


templated  acts,  not  the  records  of  those 
acts. 

We  do  not  look  for  energy  in  forms, 
books  or  statements.  It  is  not  there  1 
Energy  exists  in  the  man  whose  acts  are 
told  in  those  forms.  System  harnesses 
the  energy  into  effective  effort. 

AVERAGE  ABILITY  NOT  ENOUGH 
Among  a  thousand  manufacturers  there 
are  a  certain  number  who  are  just  barely 
making  a  living.  We  may  say  that  the 
men  in  this  class  are  of  average  ability. 
Those  below  the  average  ability  ultimately 
fail,  while  those  possessing  more  than  the 
average  ability  inevitably  move  above  the 
average  condition  into  varying  degrees 
of  prosperity.  An  analysis  of  the  ability 
of  a  manufacturer  shows  that  it  is  three- 
fold: 

(a)  He  must  know  how  to  economic- 
ally manufacture  salable  goods ; 

(d)  He  must  know  how  to  sell  those 
goods  for  a  fair  price  ; 

(c)  He  must  know  how  to  convert  his 
sales  into  cash  with  the  least  ex* 
pense  and  loss. 

[83] 


Essential  Elements  of  Business  Character 

If  a  manufacturer  possesses  these  three 
attributes  to  an  extent  sufficient  to  raise 
him  above  the  average  manufacturer,  he 
cannot  fail.  It  is  very  rare,  however,  that 
these  three  necessary  subdivisions  of  abil- 
ity exist  in  one  man.  Some  men  have 
extraordinary  ability  in  one  of  these  fac- 
tory essentials,  being  deficient  to  a  more 
or  less  extent  in  the  others.  Any  falling 
below  of  the  average  ability  in  any  one 
of  the  three  attributes  tends  to  pull  the 
higher  faculty  down  to  the  level  of  the 
average.  If  the  sum  of  the  three  abili- 
ties forms  a  total  above  the  average  of  the 
men  in  his  line  of  business,  the  manufac- 
turer will  be  more  or  less  successful ;  but 
to  attain  assured  permanent  success,  each 
of  these  three  essentials  must  be  above 
the  average  of  his  competitors. 

SYSTEM   RIGHTLY  UNDERSTOOD  AN   IM- 
PORTANT STUDY 

It  seems  to  me  that  manufacturers  can 
find  no  more  useful  or  productive  subject 
for  study  than  the  ability  or  debility  in 
their  own  business  organizations.     Fortu- 

[84] 


System  in  Business 


nately,  it  is  not  necessary  or  even  ad- 
visable that  one  man  should  alone  pos- 
sess all  of  the  various  kinds  of  force  and 
energy  needed  in  a  successful  manufac- 
turing plant.  In  fact,  the  producing,  sell- 
ing and  financing  departments  of  a  busi- 
ness have  become  so  highly  specialized 
that  each  will  fully  occupy  the  attention 
of  one  good  man.  After  having  deter- 
mined in  just  what  department  the  or- 
ganization is  deficient,  the  first  great  step 
is  taken. 

Any  physician  will  tell  you  that  it  is 
often  harder  to  diagnose  a  case  than  to 
treat  it  after  he  once  knows  just  what  the 
trouble  is.  The  same  principle  applies 
to  business  organization.  When  the 
handicapping  disability  is  discovered  it 
is  comparatively  easy  to  remove  it. 
Many  of  the  successful  manufacturers  to- 
day recognize  this  principle  to  the  extent 
that  they  devote  much  of  their  time  in 
perfecting  their  organizations.  In  doing 
this  they  realize  that  the  most  important 
work  for  them  to  undertake  consists,  not 
in   efforts   to    perform    particular    duties 

[*SJ 


Essential  Elements  of  Business  Character 

connected  with  the  manufacturing,  sell- 
ing, or  financial  ends  of  the  business  ;  for 
these  specialized  occupations  they  em- 
ploy specialized  assistants.  The  execu- 
tive head  of  the  business  finds  his  time  is 
much  more  profitably  employed  in  the 
general  direction  of  his  organization 
rather  than  in  the  execution  of  any  of  its 
necessary  details.  His  efforts  will  be 
largely  directed  towards  securing  the 
best  men  available  for  the  performance 
of  the  different  necessary  functions  of  the 
business. 

WHAT  AN  EXECUTIVE  HEAD  OF  A  BUSI- 
NESS WANTS  TO  KNOW 

Such  a  man  will  not  care  whether  his 
cost  sheets  are  on  pink  or  white  paper, 
or  what  size,  style  or  quality  is  used. 
What  he  will  want  to  inquire  is :  "  Are 
the  records  of  the  costs  of  my  factory  abso- 
lutely accurate?"  "Do  the  cost  figures 
as  shown  to  me  represent  actual  facts  ?  " 
"  Do  they  include  all  of  the  elements  en- 
tering into  the  cost  of  operating  this  fac- 
tory?" "  Can  I  rely  upon  figures  given 
[86] 


System  in  Business 


to  me  as  the  cost  per  pound,  per  piece,  per 
yard,  in  such  a  way  that  I  may  shape  my 
policies  upon  those  figures  ?  M  Such  a 
man  will  require  the  business  accounts 
to  be  beyond  question,  and  he  will  find 
a  man  upon  whom  he  can  depend  to  pro- 
duce correct  statistics. 

He  will  also  have  associated  with  him 
men  on  whom  he  can  depend  to  see  that 
the  product  of  the  plant  is  made  and  dis- 
tributed to  the  best  advantage.  Such  an 
executive  will  not  be  content  with  any 
deficiency  in  the  financial  part  of  his  or- 
ganization. He  will  want  to  have  a  man 
who  will  study  curtailment  of  expenses, 
reduction  of  losses,  and  promote  efficient 
methods  in  all  matters  wherein  expendi- 
tures or  collections  of  money  are  in- 
volved. 

DEMAND  ACCURACY  AND  ACCESSIBILITY 
OF  BUSINESS   FACTS 

The  executive  will  demand  that  all 
things  contributing  to  the  successful 
operation  of  each  and  all  departments  be 
obtained  and  put  into  practice.     He  will 

[»7] 


Essential  Elements  of  Business  Character 

demand  that  proper  accounts  be  kept  of 
everything  pertaining  to  the  business 
and  that  those  accounts  be  intelligently 
planned  to  quickly  yield  information 
necessary  to  the  successful  conduct  of 
the  business.  He  will  call  into  consulta- 
tion recognized  experts  whose  experience 
can  be  of  benefit  to  the  organization. 
Any  ideas  that  such  experts  may  offer 
regarding  improvements  in  existing  con- 
ditions and  in  the  ways  of  doing  things 
will  be  gladly  welcomed,  nay,  eagerly 
sought. 


[88] 


VII 

FINANCIAL  ABILITY  IN  BUSINESS 

MANY  shades  of  meaning  may  be 
given  to  this  subject,  but  the 
sense  in  which  I  am  using  it  is 
limited  to  that  financial  ability  in  a  busi- 
ness organization  which  necessarily  in- 
cludes a  working  knowledge  of  banking, 
collections,  granting  and  obtaining  credit ; 
all  forming  a  part  of  the  forethought  to 
look  ahead  and  plan  to  make  both  ends 
meet  when  and  where  necessary. 

The  threefold  ability  of  a  successful 
manufacturing  organization  will  be  re- 
membered— producing,  selling  and  financ- 
ing. 

In  the  following,  it  has  been  the  inten- 
tion to  open  for  discussion  some  phases 
of  the  financial  work  connected  with  the 
running  of  a  business. 

Let  us  assume,  for  the  purpose  of  this 
discussion,  that  the  man  in  our  organiza- 
tion who  attends  to  the  money  matters  is 

[89] 


Essential  Elements  of  Business  Character 

called  the  Treasurer,  and  that  he  has  come 
into  our  executive  office  for  a  little  friendly- 
chat  regarding  his  duties.  We  will  put  a 
few  kindly  inquiries  to  him  and  carefully 
note  the  answers. 

EXECUTIVE  HEAD  TO  TREASURER 

ist.  Have  you  any  idea  of  the  number 
of  different  concerns  from  whom  we 
have  withheld  credit  during  the  past 
year?  What  is  the  approximate 
amount  in  dollars  of  such  ? 

2d.  Do  you  know  how  many  similar 
cases  in  prior  years  have  subse- 
quently proved  to  be  mistakes? 
What  efforts  have  we  made  to  cor- 
rect these  past  errors  and  guard 
against  present  blunders  in  credit? 

3d.  How  many  cases  of  credit  allowed 
by  us  during  the  past  five  years  have 
proved  unworthy  ?  Why  were  these 
cases  not  ascertained  to  be  bad  be- 
fore the  goods  were  actually  shipped? 

4th.  What  is  the  relation  between 
volume  of  sales  and  amount  of  out- 
standing accounts  receivable  ?  What 
should  the  amount  be  if  collections 
are  properly  made,  having  regard  to 
our  terms  of  credit  ? 

[90] 


Financial  Ability  in  Business 

5th.  Is  it  possible  to  alter  our  terms 
of  credit  to  our  advantage  in  any 
way? 

6th.  How  many  customers  have  we 
lost  by  stereotyped  dunning  and 
what  effort  has  been  made  to  win 
them  back  ? 

7th.  Are  you  working  in  harmony  with 
or  in  antagonism  to  the  Sales  Depart- 
ment? 

8th.  What  is  the  amount  of  our  loans 
from  banks  as  compared  with  sales  ? 

9th.  What  is  the  amount  of  our  mate- 
rials, partly  finished  and  finished 
stock,  as  compared  with  our  Ac- 
counts Receivable?  Accounts  Pay- 
able and  Loans  ?  If  unfavourable, 
what  are  we  doing  to  improve  the 
ratio  ? 
ioth.  Is  our  Purchasing  Department  ob- 
taining the  best  terms  possible  from 
our  creditors  ?  What  methods  do 
you  use  to  verify  this  ? 
nth.  Is  it  possible  to  improve  our  rela- 
tions with  the  banks  ?  Have  our 
banks  been  deliberately  chosen,  or  has 
the  connection  been  formed  by  mere 
drifting  ? 
1 2th.  Are  we  using  our  cash  balance  to 
the  best  advantage  ? 

[9i] 


Essential  Elements  of  Business  Character 

13th.  Are  our  bookkeeping  methods 
economical  and  effective  in  produc- 
ing the  right  information  when  we 
want  it  ? 

14th.  Is  the  amount  of  our  insurance  of 
all  kinds  exactly  calculated,  properly 
and  most  economically  placed? 
What  study  has  been  made  of  this 
expense  ? 

15th.  Are  our  branches  and  subsidiary 
organizations  on  the  proper  and  most 
economical  financial  basis  ? 

1 6th.  Have  we  any  secret  or  hidden 
reserves  not  shown  on  our  books  ? 
If  so,  in  what  way  can  they  be  made 
available  if  needed  ? 

17th.  What  is  our  credit  standing  as 
compared  with  the  showing  on  our 
books  ?  Have  you  taken  steps  to 
see  that  we  are  reported  by  mercantile 
agencies  correctly  ? 

1 8th.  Do  you  watch  the  character  and 
quantity  of  our  purchases  to  help 
avoid  unnecessary  piling  up  of  raw 
materials  or  stock  ? 

19th.  Do  you  merely  guard  the  dollars 
already  in  our  treasury,  or  do  you 
help  increase  the  amount  by  such 
savings  as  can  be  effected  by  finan- 
cial ability  ? 

[92] 


Financial  Ability  in  Business 

20th.  Do  you  scrutinize  the  details  of 
our  general  expenses  to  find  items 
that  may  be  eliminated  or  reduced  ? 

While  the  financial  man  may  not  know 
much  about  producing  or  selling,  he 
should  be  sufficiently  familiar  with  the 
general  operation  of  the  business,  its 
needs  and  resources,  to  be  able  to  fill  the 
position  of  ready  but  conservative  man- 
ager of  the  working  capital  of  the  busi- 
ness. 

At  first  sight  it  might  appear  that  a 
corporation  fortunate  enough  to  possess  a 
large  balance  in  bank,  with  no  pressing 
payments  to  meet,  would  have  very  little 
need  for  the  exercise  of  financial  talent  ; 
but  even  in  such  a  case  the  purchasing 
agent  may  quite  naturally  buy  more 
material  and  supplies  than  is  actually 
necessary ;  collections  may  become  slow, 
and,  unless  orders  are  booked  ahead  of 
production,  the  manufactured  stock  may 
pile  up. 

All  of  these  and  other  conditions  may 
easily  arise  unless  some  man  in  the  or- 
[93] 


Essential  Elements  of  Business  Character 

ganization  makes  it  his  business  to  watch 
this  tying-up  of  capital,  and  consequent 
possibility  of  loss. 

SCOPE  OF  TREASURER'S  OFFICE 

Too  often  the  treasurer  occupies  the 
position  of  a  clerk,  a  superior  clerk  it  is 
true,  but  still  a  methodical  clerk;  one 
whose  conscience  is  clear  so  long  as  he 
is  obliged  to  pay  out  nothing  except  on 
approved  vouchers. 

Shall  we  criticize  him  for  his  failure  to 
grasp  the  possibilities  of  his  office  ?  In 
perhaps  a  few  instances  such  criticisms 
may  be  merited  ;  but  many  treasurers  re- 
gard themselves,  and  are  regarded,  simply 
as  custodians  of  the  funds  of  the  corpo- 
ration ;  and  the  opportunities  to  save 
money  by  seeing  to  it  that  the  capital  in 
each  and  every  particular  is  properly 
used  are  either  left  to  others  or  neglected. 

GRANTING  CREDIT  TO  CUSTOMERS 

Every  salesman  knows  how  easy  it  is 
to  sell  goods  to  eager  buyers.     It  should 
[94] 


Financial  Ability  in  Business 

be  added  that  buyers  who  do  not  intend 
to  pay  for  their  purchases  are  always 
eager.  While  this  class  is  a  hard  one 
with  which  to  deal,  another  difficult  group 
or  class  of  buyers  consists  of  those  who 
can  be  persuaded  to  give  orders  to  the 
salesmen  for  merchandise  for  which  they 
intend  to,  but  cannot  pay. 

Allowing  credit  may  often  be  only  a 
clerk's  job  ;  but  in  many  cases  the  grant- 
ing or  withholding  credit  at  the  right 
time  is  a  matter  calling  for  a  very  keen 
kind  of  ability. 

Human  nature  is  composed  of  so  many 
fine  qualities,  including  natural  goodness, 
that  it  is  always  very  distasteful  to  a 
business  man  to  be  obliged  to  refuse  to 
sell  goods  to  a  customer. 

Whether  the  buyer  proposes  to  pur- 
chase a  tin  of  meat  or  a  year's  supply  of 
steel,  it  is  in  our  hearts  to  let  him  have 
the  things  he  wants. 

CREDIT  MAN  COLD-BLOODED 
The  regulation  credit  man,  on  the  other 
hand,  believes  that  to  properly  fulfill  the 
[95] 


Essential  Elements  of  Business  Character 

duties  of  his  position  he  must  pass  upon 
the  credit  standing  of  the  buyer  in  a 
purely  cold-blooded  way. 

He  has  been  taught  to  believe  this  by 
and  through  the  artificial  system  of  which 
he  is  the  natural  product.  This  system 
has  caused  the  taking  of  the  matter  of 
granting  credit  largely  out  of  the  hands 
of  the  proprietors  of  the  business  and 
placing  it  in  the  hands  of  highly  special- 
ized clerks  who  must,  as  a  rule,  very 
quickly  exercise  what  judgment  they 
have  upon  facts  placed  before  them.  In 
but  comparatively  few  cases  does  the  credit 
man  come  into  personal  contact  with  the 
customer.  Everything  that  can  be  learned 
about  the  party,  and  the  information  is 
usually  very  meagre,  appears  on  paper. 
Perhaps  in  many  lines  of  business,  where 
an  immense  number  of  small  accounts 
form  the  volume,  no  other  proper  way 
can  be  devised  to  obtain  and  analyze 
credit  information  than  is  now  in  use 
among  trained  credit  men ;  but  there  is 
large  room  for  improvement  in  credit 
methods,  especially  where  the  product  is 

[96] 


Financial  Ability  in  Business 

sold   to   other   manufacturers,   wholesale 
merchants  or  large  retailers. 

ROUTINE  OFFICIALS 

We  must  not  blame  the  credit  man  for 
being  a  part  of  the  arbitrary  credit  sys- 
tem. He  is  only  one  of  a  vast  number  of 
officials  of  greater  or  less  magnitude  who 
now  are  working  on  record all  day.  Sev- 
eral credit  men  of  my  acquaintance  are 
bigger  than  their  nominal  positions ;  but 
many  others  are  merely  routine  clerks  on 
whom  the  higher  officials  have  mis- 
takenly thrown  their  shirked  duties. 

If  the  financial  man  would  see  the  pos- 
sibilities of  making  money  for  the  business 
in  his  own  department  as  I  see  them,  he 
would  feel  that  his  office  forms  one  of  the 
important  departments  of  the  business. 

To  those  who  have  had  any  practice  in 
bankruptcy  cases,  either  as  lawyers  or 
accountants,  there  stands  out  in  a  clear 
light  all  the  weakness  of  the  ordinary 
routine  credit  system.  To  such  it  seems 
to  be  very  evident  that  the  fraudulent 
failure  is  easy  to  perpetrate.  A  dishonest 
[97] 


Essential  Elements  of  Business  Character 

merchant  may  often  easily  obtain  goods, 
and  an  honest  man  may  too  quickly  be 
refused  credit. 

No  system  can  be  devised  to  prevent 
some  goods  from  being  shipped  to  ras- 
cals, nor  can  ways  be  shaped  to  auto- 
matically guard  against  the  refusal  of 
credit  to  a  good  man,  now  in  apparently 
poor  financial  condition  according  to  pres- 
ent methods  of  calculation,  but  who  in 
time  will  be  in  a  position  to  demand 
rather  than  request  favours. 

PERSONAL  SUPERVISION  BY  TREASURER 
What  I  want  to  point  out  is  just  what 
any  good  mercantile  agency  man  will 
confirm:  that  much  real  thought,  care 
and  personal  attention  on  the  part  of  the 
treasurer  is  needed. 

He  should  gather  all  the  credit  infor- 
mation possible;  then  use  it  merely  as 
one  of  the  useful  tools  by  which  he  digs 
for  the  truth. 

Some  credit  men  tell  me  that  they  are 
afraid  to  talk  to  proposed  customers,  the 
fear  arising  from  the  thought  that  preju- 
[98] 


Financial  Ability  in  Business 

dice  for  or  against  the  man  will  be  created 
in  a  personal  interview. 

The  real  credit  man,  let  us  say  the 
treasurer  if  he  is  well  up  in  his  business, 
will  want  to  see  every  customer  concern- 
ing whose  standing  there  is  the  least 
shade  of  suspicion,  or  about  whom  very 
little  is  known,  good  or  bad. 

Of  course,  it  will  be  impracticable  for 
him  to  carry  out  his  desires  into  a  per- 
sonal interview  with  many  such,  but  his 
desire  to  refrain  from  making  a  mistake 
in  the  man  will  cause  to  spring  in  the 
treasurer's  mind  many  ways  and  means 
of  overcoming  the  difficulties  of  getting 
at  the  real  facts  in  each  case,  whether  by 
personal  interview  or  otherwise. 

BUSINESS   FRIENDS  AND  ENEMIES 

Some  of  my  readers  will  recall  instances 
showing  the  bitterness  created  in  the 
breasts  of  honest  men  turned  down  by 
some  credit  man's  rule  of  thumb. 

On  the  other  hand,  you  will  remem- 
ber vastly  different  kinds  of  experiences 
wherein  you  originally  took  what  you 
[99] 


Essential  Elements  of  Business  Character 

thought  at  that  time  was  a  chance,  and 
thereby  made  a  lifelong  business  friend. 
Now  these  opposites — wide  apart  as 
the  poles  in  their  effects  on  business — 
are  simple  enough  things  to  mention,  but 
they  may  serve  the  purpose  of  show- 
ing the  good  fruit  to  be  gathered  by  a 
study  of  the  finer  points  of  business,  in 
this  instance  exampled  by  the  possibility 
of  turning  into  reasonably  good  business 
risks  those  cases  ordinarily  considered 
simply  as  chances. 

COLLECTIONS 

Another  department  calling  for  the  dis- 
play of  financial  ability  is  that  employed 
in  collecting  the  accounts  of  customers. 
To  get  the  customers  to  pay  promptly 
and  feel  no  resentment  in  so  doing  is  an 
ability,  or  even  art,  possessed  by  few. 

Printed  dunning  letters,  rubber-stamped 
reminders  and  all  forms  of  stereotyped 
communications  to  customers  regarding 
the  accounts  may  be  suitable  for  some 
lines  of  business,  but  the  universal  appli- 
cation of  fixed  forms  or  methods  request- 
[100] 


Financial  Ability  in  Business 

ing  remittances  is  one  of  the  least  artistic 
means  employed  in  any  department  of 
business. 

All  of  the  various  dunning  devices  may 
be  effectual  in  the  majority  of  cases,  and 
that  it  is  so  is  the  reason  why  the  col- 
lections are  so  largely  intrusted  to  sub- 
ordinates. 

In  many  kinds  of  business,  however, 
these  arbitrary  rules  work  an  injury  to 
the  business  not  often  fully  realized  by 
the  executive. 

A  man  may  be  dunned  into  paying  an 
account,  all  the  while  labouring  under  a 
real  or  fancied  insult ;  and  when  he  can, 
he  will  buy  elsewhere.  The  executive 
does  not  hear  of  all  these  cases  because 
the  disgruntled  customer  either  nurses 
his  grievance  in  secret,  or,  if  he  writes  to 
the  company,  his  letter  may  be  side-tracked. 

The  treasurer  should  be  big  enough  to 
understand  that  to  keep  a  good  customer 
is  more  profitable  than  to  obtain  a  new 
one ;  and  that  he  has  an  important  part 
to  play  in  conjunction  with  the  general 
sales  manager  in  so  doing. 
[ioi] 


Essential  Elements  of  Business  Character 

BANK  CREDIT 

To  the  average  business  man,  until  the 
ice  has  been  broken,  a  sort  of  mystery 
surrounds  the  bank  cashier  and  his  busi- 
ness. The  wise  banker  is  making  every 
effort  to  overcome  the  condition  and 
bring  himself  into  close  relation  with  his 
depositor.     He  should  be  met  half-way. 

He  cannot,  without  loss  of  position,  go 
further  than  that  towards  a  cultivation  of 
friendship.  While  he  is  seeking  business 
for  his  bank,  he  can  never  forget  that  he 
is  the  custodian  of  money  belonging  to 
other  people;  and  he  must  preserve  a 
rather  more  cautious  attitude  towards 
depositors  and  customers  than  is  usual 
among  business  acquaintances  in  other 
lines. 

The  financial  man  should  take  the  in- 
itiative and  actively  cultivate  the  business 
friendship  of  one  or  more  bank  cashiers. 
Business  can  rarely  be  conducted  without 
bank  loans.  At  times  during  the  year 
most  active  enterprises  require  more 
working  capital  than  is  obtainable  in  the 
ordinary  process  of  collections. 
[  I02] 


Financial  Ability  in  Business 

One  or  more  banks  should  be  put  in  a 
position  to  supply  such  needs  without 
delay.  In  other  words,  credit  must  be 
established. 

VALUE  OF  BANK  FRIENDSHIP 
No  better  way  of  acquiring  bank  credit 
can  be  found  than  by  creating  and  main- 
taining a  frank  and  confidential  relation 
with  thoughtful  and  experienced  bank 
officers.  But  there  is  another  important 
service  that  may  be  obtained  from  the 
broadly  trained  bank  cashier.  Besides 
the  credit  accommodation  you  may  ob- 
tain, he  can  help  you  in  establishing  your 
credit  elsewhere.  Having  credit  methods 
at  his  fingers'  ends,  he  knows  all  the 
kinks  to  this  very  complicated  and  deli- 
cate structure.  Your  friend,  the  bank 
cashier,  can  guide  you  through  the  intri- 
cacies with  experienced  hands.  Unless 
you  have  tried  it,  you  will  be  surprised  to 
realize  in  how  many  ways  the  right  kind 
of  a  bank  cashier  can  be  of  assistance. 
The  help  that  he  can  give  is  not  confined 
to  the  lending  of  money. 
[103] 


Essential  Elements  of  Business  Character 

I  have  spoken,  in  connection  with 
banking,  of  the  cashier,  not  intending, 
by  referring  to  him  only  among  the  offi- 
cers of  the  bank,  to  be  understood  as  in- 
ferring that  he  is  the  one  man  in  control 
of  the  bank's  funds,  nor  am  I  overlooking 
the  directors  who  really  direct  the  bank. 
I  am  using  the  term  "  cashier  "  as  stand- 
ing for  the  bank's  representative  officer, 
with  whom,  as  a  general  rule,  the  cus- 
tomers, at  least  preliminarily,  come  in 
contact. 

In  discussing  matters  with  the  proper 
officer  of  the  bank  (usually  the  cashier), 
remember  that  the  basis  upon  which  the 
idea  of  credit  is  founded  is  a  true  state- 
ment of  financial  condition. 

BANK  OFFICER  CLOSELY  WATCHED 
When  you  go, .or  your  financial  man 
goes,  to  the  bank,  think  of  the  responsi- 
bilities resting  upon  the  bank  officials  in 
every  detail  connected  with  receiving  and 
paying  out  money.  Do  you  know  how 
carefully  the  money  is  protected  ?  First, 
there  is  his  fidelity  bond,  designed  to 
[104] 


Financial  Ability  in  Business 

protect  the  banks'  depositors ;  next,  na- 
tional bank  cashiers  are  required  to  ren- 
der to  the  Comptroller  of  the  Currency 
five  sworn  statements  of  the  financial  con- 
dition of  the  bank  every  year ;  next,  in 
the  larger  cities  the  bank  is  examined 
twice  each  year  by  a  government  exam- 
iner ;  and  recently  in  a  few  cities,  in  ad- 
dition to  the  government  examinations, 
the  clearing  house  examiner  makes  a 
special  examination  once  in  every  year. 

But  that  is  not  all ;  a  large  number  of 
banks  now  have  private  special  exami- 
nations by  certified  public  accountants, 
either  annually,  semi-annually  or  monthly. 

So  you  see  that  when  you  go  to  the 
bank  with  a  statement  of  financial  condi- 
tion, you  are  presenting  it  to  one  whose 
own  statements  are  required  to  be  sur- 
rounded with  safeguards  against  error. 

Is  it  right  for  you  to  ask  him  to  take 
your  unsupported  word  and  hand  out  to 
you  the  funds  which  he  must  swear  are 
intact  ? 

If  the  cashier's  own  statement  must  be 
so  carefully  prepared  and  verified,  is  it 
[105] 


Essential  Elements  of  Business  Character 

right  for  you  to  neglect  or  object  or  refuse 
to  have  your  own  statements  confirmed  ? 

Fortified  with  a  minor  amount  of  the 
same  kind  of  proof  that  the  cashier  must 
himself  obtain  to  pass  muster,  you  will 
find  your  interviews  at  the  bank  not  only 
agreeable,  but  very  beneficial  to  you  in 
more  ways  than  one. 

If  you  find,  when  you  want  money 
from  the  banks  and  cannot  get  it  on  the 
ground  that  your  statement  is  not  good 
enough,  be  assured  that  there  is  some- 
thing radically  wrong  with  your  organi- 
zation— some  disease  there  ;  some  de- 
bility in  one  or  more  of  the  vitals  that  I 
have  pointed  out  as  essential  to  success- 
ful business. 


[106] 


VIII 
SOME  OVERLOOKED  EXPENSES 

ONE  of  the  most  important  classes 
of  expense  in  manufacturing  con- 
sists of  what  is  commonly  known 
as  "  overhead,"  or  "  general  "  expense 
by  those  who  do  not  analyze  accounts 
into  much  detail.  The  following  incident 
illustrates  the  thought  that  in  calculating 
costs,  these  expenses  must  be  taken  into 
account. 

Arrangements  for  starting  sixty  sales- 
men on  the  road  with  samples  of  the  new 
"simplex  seamless  stockings"  occupied 
the  principal  owner  of  a  knitting  mill  until 
late  in  the  afternoon.  He  hurried  home, 
changed  his  clothes,  and  put  in  an  appear- 
ance at  a  dinner  at  the  Manufacturers' 
Club.  During  the  period  between  two  of 
the  courses,  his  neighbour,  the  manager 
of  a  large  factory,  told  him  about  a  cost 
system  of  accounts  recently  introduced  in 
[  io7] 


Essential  Elements  of  Business  Character 

his  mill.  Enthusiastic  in  his  praises,  he 
described  the  various  items  entering  into 
costs  as  shown  by  the  cost  sheets,  and  as- 
serted that  the  system  had  demonstrated 
that  there  were  many  things  connected 
with  accurate  cost  accounts  about  which 
he  had  never  before  heard. 

On  his  way  home  the  mill  owner  turned 
the  various  terms  that  he  had  heard  over 
and  over  in  his  mind.  "  Power  cost," 
"  supervision  cost,"  "  selling  cost,"  and  a 
number  of  other  cost  items  stuck  in  his 
head  until  they  began  to  take  shape  in  the 
form  of  inquiries  as  to  whether  all  of  these 
things  had  been  properly  provided  for  in 
his  own  cost  accounts.  Early  next  morn- 
ing, still  thinking  about  the  matter,  he 
found  himself  critically  inspecting  the 
sheets  on  which  the  bookkeeper  had 
neatly  prepared  the  costs  of  his  "  simplex 
seamless."  He  could  find  there  none  of 
the  terms  so  fluently  used  the  night  before 
by  his  friend.  The  impression  that  this 
friend  had  given  him  regarding  the  im- 
portance of  the  items  mentioned  formed  a 
little  disturbing  element  in  his  otherwise 
[108] 


Some  Overlooked  Expenses 

satisfied  mind.  He  did  not  wish  to  enter- 
tain a  doubt  that  the  established  method 
of  cost  calculation  in  his  office  had  pro- 
duced reasonably  accurate  results,  and  yet 
he  could  not  get  rid  of  the  thoughts 
lodged  there  in  a  consideration  of  the 
subject.  In  order  to  relieve  his  mind  of 
any  possible  chance  that  a  mistake  had 
been  made,  he  consulted  with  the  expert 
about  whom  his  friend  had  spoken  the 
previous  evening.  Much  to  his  surprise 
he  found  that  the  meeting  with  the  expert 
became  deeply  interesting.  In  the  ensu- 
ing discussions  regarding  the  fundamental 
principles  of  cost  accounting  he  experi- 
enced great  satisfaction,  which  increased 
the  more  as  he  grew  to  realize  the  great 
importance  of  the  hitherto  neglected  mat- 
ters. Some  of  the  results  of  these .  con- 
sultations are  expressed  in  a  few  simple 
thoughts  set  down  here  for  the  benefit  of 
those  who  have  not  already  pursued  the 
subject  to  a  more  advanced  stage. 

Little   analytical  ability  is  required  to 
find   the   cost  of  the  raw  materials  con- 
sumed in  the  manufacture  of  any  given 
[109] 


Essential  Elements  of  Business  Character 

article  or  the  labour  directly  applied  to 
the  production  of  that  article. 

"  PRIME  "  COSTS  READILY  ASCERTAINED 

If  certain  materials  of  which  the  article 
is  composed  cost  ten  cents  or  a  dollar  per 
pound,  or  per  yard,  or  per  piece,  it  is  com- 
paratively easy  to  determine  the  number 
of  pounds  or  yards  or  pieces  of  such  mate- 
rial consumed,  and  arrive  by  a  simple 
arithmetical  process  at  the  total  cost  of 
the  materials  in  the  finished  article. 

Similarly,  if  the  price  of  the  labour  is 
fixed  by  the  piece  work  method,  the  cost 
of  the  labour  directly  involved  in  the 
manufacture  of  the  article  is  easily  cal- 
culated. If  various  kinds  of  materials 
and  processes  are  required  to  complete 
the  finished  article,  the  problem  is  simply 
extended  a  little — it  is  not  complicated  by 
the  additional  details. 

These  two  ingredients,  material  cost 
and  fixed  or  ascertainable  labour  cost, 
when  added  together  produce  a  sum 
ordinarily  referred  to  as  "  prime  "  cost. 

Of  course,  it  is  of  first  importance  to 
[no] 


Some  Overlooked  Expenses 

know  this  prime  cost.  Without  this 
knowledge,  no  adequate  idea  of  the  total 
cost  can  be  expressed  ;  but  the  ease  with 
which  these  figures  may  usually  be  ob- 
tained, as  compared  with  the  struggle 
involved  in  the  effort  to  get  at  the  re- 
maining facts,  reduces  the  problem,  as  a 
problem,  to  a  secondary  place. 

GENERAL  EXPENSES 
The  real  complication  begins  when, 
having  realized  that  other  figures  must  be 
found  and  added  to  the  cost  of  the  raw 
materials  and  direct  labour  before  the  cost 
can  be  ascertained,  we  attempt  to  find 
and  apply  those  figures  to  the  separate 
cost  sheets.  Very  little  argument  is  neces- 
sary to  convince  the  manufacturer  that 
general  expenses  of  all  kinds  form  just  as 
much  a  part  of  the  cost  of  a  finished  ar- 
ticle as  the  more  easily  ascertained  ex- 
penses of  material  and  direct  labour. 
Most  large  manufacturing  plants  thor- 
oughly understand  the  necessity  for  con- 
sideration of  the  general  expenses,  and 
elaborate  schemes  called  "  cost  systems  " 
[in] 


Essential  Elements  of  Business  Character 

are  devised  to  "  take  care  "  of  all  such  ex- 
penses, frequently  classified  into  three 
groups  of  costs,  usually  known  to  cost  ac- 
countants by  such  names  as  " overhead" 
"selling"  and  "administration" 

Is  this  interesting  to  any  others  than 
the  "  cost  cranks  "  ?  Yes !  In  order  to 
make  the  most  of  any  manufacturing 
business,  the  moving  spirit  in  a  factory 
will  be  anxious  to  apply  himself  to  the 
main  facts  of  the  cost  of  his  product.  He 
will  not  want  to  go  into  too  many  details, 
but  he  will  be  very  desirous  of  knowing 
whether  his  cost  figures  are  either  truths 
or  dangerous  fallacies. 

Let  us  try  to  get  hold  of  the  meat  of 
the  idea  of  what  constitutes  reliable  cost 
accounts,  so  we  can  explain  it  to  our  as- 
sistants. Suppose,  in  order  to  talk  it 
over,  we  call  into  our  private  office  the 
man  in  charge  of  the  production  end  of 
the  plant.  He  will  probably  agree  with 
us  that  all  human  effort  put  forth  in  pro- 
duction, in  whatever  form  of  labour  it  is 
expended,  is,  of  course,  more  or  less 
directly  connected  with  the  cost  of  the  ar- 

[112] 


Some  Overlooked  Expenses 

tide  produced.  "  You  take  care  of  all 
that  in  your  cost  accounts,  don't  you  ?  " 
we  ask.  "  Oh,  yes  I  of  course,"  he  will 
probably  reply.  Just  to  satisfy  yourself 
perfectly,  while  not  doubting  him  in  the 
least,  you  may  feel  inclined  to  pursue  the 
inquiry  a  little  further  by  asking  him, 
"  How  do  you  charge  up  the  labour  cost 
of  the  machinists'  helpers  assisting  to  place 
castings  on  lathes,  the  engineer  opera- 
ting the  power  equipment,  and  the  gen- 
eral helpers  unloading  from  cars  or  wag- 
ons raw  materials  or  loading  finished  ar- 
ticles ?  " 

SO-CALLED  UNPRODUCTIVE  OR  INDIRECT 
LABOUR 

You  have  hit  on  a  very  few  examples 
of  a  very  large  class  of  pay-roll  expendi- 
tures, usually  described  as  "indirect"  or 
"  unproductive  "  labour.  The  reason  for 
this  description  is  found  in  the  difficulty 
of  ascertaining  the  exact  amount  of  such 
labour  consumed  in  the  handling  of  any 
one  article  or  lot.  The  labour  of  the  en- 
gineer is  indispensable,  but  it  would  be  a 
[US] 


Essential  Elements  of  Business  Character 

very  difficult  thing  to  divide  his  time  so 
that  the  exact  proportion  could  be  charged 
to  the  cost  of  any  particular  article  manu- 
factured during  the  course  of  the  day. 
Less  difficulty  would  be  experienced  in 
dividing  the  time  of  the  general  labourers, 
perhaps ;  but  even  this  kind  of  labour  is 
usually  sufficiently  difficult  to  split  up  and 
distribute  to  "  jobs  "  to  prevent  its  prac- 
tical application  in  so-called  "  individual " 
cost  accounts. 

MANY  EXPENSES  OVERLOOKED 
In  the  smaller  plants,  where  the  matter 
of  accurate  costs  is  of  just  as  much  im- 
portance as  in  the  larger,  perhaps  many 
cases  exist  wherein  too  little  attention  is 
given  to  any  kind  of  expenses  other  than 
those  of  material  and  direct  labour. 
Many  manufacturers,  indeed,  do  add  to  the 
figures  showing  "  cost  of  labour  and  ma- 
terial "  an  additional  amount  for  "  general 
expenses,"  ascertained  by  calculating  an 
arbitrary  percentage  of  the  "  material  and 
labour"  cost. 

It  may  happen  that  in  a  factory  whose 
["4] 


Some  Overlooked  Expenses 

product  consists  entirely  of  one  kind  of 
article,  such  as  men's  shoes,  safety  razors, 
or  car  wheels,  and  whose  volume  of  sales 
runs  from  year  to  year  without  material 
variation,  a  percentage  added  to  material 
and  labour  cost  to  cover  all  other  ex- 
penses can  be  readily  ascertained  and  ap- 
plied ;  but  even  here  various  sizes  and 
degrees  of  quality  may  upset  such  rough- 
and-ready  methods. 

Few  people,  unless  they  knew,  could 
imagine  the  number  of  different  kinds  of 
automobile  wheels  turned  out.  One  man- 
ufacturer produces  over  300  styles,  ranging 
from  numerous  sizes  and  designs  adapted 
to  small  machines  up  to  those  built  for 
heavy  commercial  trucks,  some  costing 
four  times  the  amount  of  the  smaller 
wheels. 

The  printing  ink  business  is  another 
illustration.  The  wide  variety  of  colours 
and  qualities  complicates  the  cost  account- 
ing. One  manufacturer  grinds  and 
mixes  over  3,000  different  numbers  with 
prices  of  from  a  few  cents  to  several  dol- 
lars per  pound. 

["5] 


Essential  Elements  of  Business  Character 

It  can  readily  be  seen  that  in  any  such 
plants  as  these  no  rule-of-thumb  applica- 
tion of  "  overhead  "  expenses  will  be  good 
enough.  The  sincere  manufacturer  will 
want  to  get  his  costs  down  much  finer 
than  is  possible  by  any  short-cut  methods. 
He  will  not  want  to  go  to  the  other  ex- 
treme, and  tie  everybody  around  his 
plant  with  so  much  "  system  "  that  they 
can  do  nothing  useful,  and  he  won't  want 
to  spend  a  dollar  to  ascertain  the  cost  of 
a  fifty-cent  article. 

No  extremes  should  be  permitted,  as 
no  good  results  can  come  from  such. 
The  best  results  can  be  obtained  through 
an  earnest  study  of  the  problem  by  the 
manufacturer  himself  in  conjunction  with 
some  expert  cost  man  who  has  no  partic- 
ular system  to  advocate  and  no  hobby  to 
ride. 

Such  an  expert  as  has  been  trained  in 
the  school  of  actual  experience,  gained  in 
the  study  of  many  different  kinds  of  man- 
ufacturing plants,  can  bring  to  bear  on 
each  problem  placed  before  him  a  broad 
mind  and  intelligent  ability  to  grasp  the 
[»6] 


Some  Overlooked  Expenses 

particular  and  peculiar  conditions  con- 
fronting him.  He  can  assist  materially 
in  shaping  the  labour  of  the  factory  ac- 
countants so  that  readable  and  comparable 
results  can  be  quickly  and  economically 
obtained. 

Such  an  expert  will  not  find  it  neces- 
sary to  ask  that  the  business  be  made  to 
conform  to  any  "  system."  He  will  de- 
vise a  way  by  which  the  books  and  ac- 
counts, whether  kept  in  the  office  or  fac- 
tory, will  fit  the  business,  as  distinguished 
from  the  ready-made  system  men  who 
make  any  business  fit  their  system. 


t»7] 


IX 

IMAGINED  PROFITS 

ON  the  desk  of  the  president  of  a 
woollen  goods  manufacturing 
company  were  two  piles  of 
papers.  The  large  pile  consisted  of  the 
day's  orders,  some  for  the  various  lines 
manufactured  by  his  mill,  but  the  large 
number  in  quantity  and  value  spoke 
loudly  to  him  of  his  success  in  marketing 
the  new  X  L  43.  He  then  turned  to 
the  other  pile  of  statements  which  told  him 
the  costs  of  the  goods  sold. 

A  pleased  expression  flitted  back  and 
forth  over  his  face  as  his  pencil  figured  on 
a  pad  the  profits  to  be  made  on  these 
orders.  Adding  the  amount  of  the  prof- 
its of  the  orders  before  him  to  a  figure 
representing  the  profits  on  orders  pre- 
viously received  and  passed  on  to  the  su- 
perintendent, the  president  calculated  on 
a  total  of  10,000  dozen  of  this  new  style,  a 
net  profit  of  $26,400. 

[us] 


Imagined  Profits 

He  went  over  the  costs  again  carefully 
from  fear  that  he  might  have  made  a  mis- 
take in  the  figures,  but  no!  there  they 
stood  out  plainly  enough,  as  he  read  them 
over: 

Cost  of  material  each $     .71 

Cost  of  labour  each 42 

$  1.13 
General  expense,   10%  of  $1.50 15 

Total  cost,  each $  1.28 

Selling  price  per  dozen $18.00 

Cost  per  dozen I5-36 

Profit   per  dozen $2.64 

The  figures  had  been  prepared  by  the 
old  superintendent  who  had  calculated 
the  cost  of  production  for  many  years. 
In  fact,  there  was  no  one  else  in  the  mill 
who  could  estimate  costs  and  profits  as 
closely  as  could  this  time-honoured  em- 
ployee. 

It  is  no  wonder  that  the  president  felt 
pleased  at  the  prospects  for  the  next  semi- 
annual closing,  now  only  three  months 
away. 

["9] 


Essential  Elements  of  Business  Character 

He  rang  for  his  stenographer  and  dic- 
tated several  telegrams  to  be  sent  to  his 
travelling  men,  congratulating  them  on 
the  large  orders  they  were  sending  in. 

When  these  had  been  disposed  of,  he 
sent  for  the  superintendent,  whose  arrival 
in  the  office  was  immediately  followed  by 
a  consultation  as  to  ways  and  means  of 
increasing  the  capacity  of  the  machines  to 
produce  the  popular  X  L  43.  The  mill 
hummed  merrily,  large  quantities  of  these 
goods  were  shipped,  more  orders  received 
and  shipped  until  the  prospect  assumed 
the  rosy  hue  of  an  unusually  profitable 
period. 

A  few  days  after  the  closing  period,  the 
president  again  appeared  at  his  desk 
gazing  at  two  papers  laid  side  by  side 
before  him.  His  aching  head  rested  on 
his  hands  and  his  face  wore  an  expres- 
sion of  perplexity. 

One  of  the  papers  contained  the  profit 
and  loss  statement  for  the  six  months  just 
ended.  This  had  been  handed  him  an 
hour  before,  but  he  had  not  ceased  its  ex- 
amination, except  to  glance  briefly  from 
[120] 


Imagined  Profits 


time  to  time  at  the  X  L  43  cost  sheet,  the 
other  paper. 

The  balance  of  the  profits  for  the  period 
amounted  to  exactly  $2,317.58.  What 
had  become  of  the  large  profits  on 
X  L  43  alone,  to  say  nothing  about  the 
profits  on  other  lines  ? 

To  be  sure,  the  salesmen  had  pushed 
this  line  to  the  uttermost,  with  the  natural 
result  that  the  sales  of  all  other  goods 
fell  off  very  materially.  But  the  profit  on 
X  L  43  ought  to  have  been  large  enough 
to  more  than  take  the  place  of  what  might 
have  been  made  on  the  neglected  lines. 

It  is  not  to  be  wondered  that  he  was 
worried.  The  more  he  studied  the  prob- 
lem the  more  puzzled  he  became. 

He  consulted  with  a  friend,  an  expert 
cost  accountant,  who  suggested  that  per- 
haps a  little  conversation  with  the  super- 
intendent might  throw  light  on  the  sub- 
ject. 

The  president  doubted  that  there  was 
anything  the  matter  with  the  cost  figures 
of  the  superintendent,  being  more  inclined 
to    believe   that   there   was    "  something 

[121] 


Essential  Elements  of  Business  Character 

wrong  with  the  books,"  but  he  readily 
consented  to  anything  that  might  help. 

The  expert  went  to  the  mill  and  met 
the  president  and  superintendent.  "  Be- 
fore I  go  into  details,"  said  he  to  the  su- 
perintendent, "  perhaps  we  can  save  time 
if  you  will  let  me  ask  you  a  question  or 
two."     The  superintendent  acquiesced. 

"  I  notice  that  you  have  added  fifteen 
cents  to  the  cost  of  one  '  X  L  43.'  Will  you 
tell  me  how  you  obtained  that  amount  ?  " 
asked  the  expert. 

"  That  is  just  ten  per  cent,  of  $1.50,  the 
price  we  get  for  the  goods,"  replied  the 
superintendent. 

"What  does  the  fifteen  cents  general 
expense  include?" 

"All  of  our  other  expenses — general 
expenses,  you  know — office  expenses  and 
like  that,"  he  replied. 

"  Is  the  amount  always  just  ten  per 
cent  of  the  selling  price?"  was  asked. 

"I  suppose  it  must  be,"  he  replied. 
"  It  has  always  been  ten  per  cent,  as  long 
as  I  can  remember." 

"  You  have  used  this  figure  of  ten  per 
[122] 


Imagined  Profits 


cent,  to  cover  all  overhead  and  general 
expenses  for  a  number  of  years  ?  "  inter- 
rogated the  examiner. 

"  Oh,  yes,  we  have  always  used  it. 
Why?  Does  anybody  use  a  different 
figure  ?  "  came  the  astonishing  question. 

The  practical  men  who  read  this  will 
hardly  require  any  further  comments. 
Perhaps  it  may  be  added  that  after  a 
careful  examination  it  was  shown  that  on 
this  particular  article  a  loss  was  sustained 
in  each  and  every  sale.  The  "  general " 
expenses  which  in  this  plant  were  found 
to  include  salaries  and  wages  of  the  su- 
perintendent, foreman,  shipping  clerk, 
storekeeper,  machinists,  expenses  for  rent, 
freight  and  cartage,  supplies,  insurance, 
interest  and  salesmen's  expenses,  on  some 
of  these  articles  amounted  to  over  thirty 
per  cent,  of  the  sales,  instead  of  ten  per 
cent.,  and  that  his  "  profit "  as  estimated 
on  this  particular  article  was  entirely 
wiped  out.  But  it  was  very  happily 
found  that  on  other  articles  his  "  general 
expense "  percentage  was  in  reality  less 
than  he  had  figured. 

[  123  I 


Essential  Elements  of  Business  Character 

ADJUSTED  COST  FIGURES  STOP  LOSS 
When  the  facts  were  set  before  the 
manufacturer,  and  he  had  become  fully 
convinced  of  the  accuracy  of  the  adjusted 
cost  figures,  certain  unprofitable  lines 
were  discontinued  and  other  lines  on 
which  profits  were  shown  to  be  good 
were  pushed  to  the  uttermost,  resulting 
in  a  satisfactory  condition  in  the  follow- 
ing period. 

Perhaps  this  may  seem  to  some  to  be 
an  exceptional  case.  No  such  errors  may 
exist  in  plants  in  which  they  are  in- 
terested. 

Perhaps  some  one  will  feel  like  ex- 
claiming, "  Who  could  be  foolish  enough 
to  leave  any  expense  out  of  his  costs  ? " 
Another  friend  may  say,  "  We  never  fig- 
ure 'overhead'  charges  on  this  basis  of 
1  selling  price.'  "  Many  manufacturers, 
indeed,  do  calculate  the  cost  of  their  prod- 
uct carefully,  not  depending  at  all  on 
guessed  costs  and  profits.  This  simple 
case  is  taken  from  one  of  a  number  of  very 
busy  producers  who  have  not  had  the  time 
to  take  up  what  is  really  a  study  in  itself. 
[  ^4} 


Imagined  Profits 


They  fully  appreciate  the  importance 
of  the  provision  for  an  exact  distribution 
of  all  general  expenses  to  the  different 
articles  produced  by  some  method  or 
other,  and  they  realize  the  tremendous 
significance  of  inaccurate  cost  calcula- 
tions, but  it  is  not  always  clear  to  them 
that  it  is  possible  to  calculate  costs  very 
closely  in  their  plants.  Unless  one  is 
ready  to  admit  that  it  is  very  difficult  in 
some  plants  he  can  be  set  down  as  a  fool. 
On  the  other  hand,  we  will  all  agree, 
won't  we,  that  many  tough  problems  can 
be  solved  if  we  go  at  them  right. 

Many  things  in  the  nature  of  expense 
are  overlooked  that,  if  taken  into  account, 
would  cause  the  profits  that  we  imagine 
to  exist  to  fade  utterly  away.  Take  the 
case  of  one  iron  foundry  for  example. 
Contracts  were  being  executed  for  a  large 
lot  of  huge  castings,  on  which  a  small  but 
substantial  profit  had  been  estimated  by 
the  cost  department.  A  number  of  car- 
loads had  been  shipped  and  billed,  but  the 
estimated  profit  did  not  seem  to  material- 
ize on  these  shipments.  A  dispute  arose 
[  125  ] 


Essential  Elements  of  Business  Character 

between  the  bookkeeping  and  cost  de- 
partments, each  claiming  correctness  of 
its  own  figures  and  asserting  that  errors 
must  exist  in  the  figures  of  the  other. 

As  the  result  of  an  investigation,  ordered 
when  it  was  found  that  the  argument  did 
not  abate,  the  expert  attributed  the  loss 
largely  to  broken  castings.  The  pouring 
of  the  molten  iron  into  the  immense 
moulds  required  great  care  and  skill. 
Neglected  supervision  and  ensuing  care- 
lessness caused  the  spoiling  of  a  large 
percentage  of  these  castings ;  enough,  in 
fact,  to  disperse  into  thin  air  all  of  the 
profits.  Perhaps  no  one  was  more  as- 
tonished than  the  president  himself  when 
the  expert  told  him  that  "  if  you  will  get 
down  to  the  foundry  early  in  the  morn- 
ing, and  stay  there  with  the  '  eye  of  the 
master '  on  the  men,  I  am  convinced  that 
you  can  make  money."  The  principal 
trouble  here  was  that  the  president,  an 
easy-going  young  man,  came  and  went 
as  he  felt  disposed,  leaving  behind  him 
no  one  sufficiently  interested  in  the  busi- 
ness to  do  other  than  perfunctory  work. 

[126] 


Imagined  Profits 


Estimated  profits  are  always  "im- 
agined," but  what  a  difference  between 
estimates  based  upon  known  things,  and 
estimates  depending  in  turn  upon  things 
unknown.  Such  estimates  are  nothing 
more  than  guesses ! 

In  most  large  manufacturing  plants 
considerable  outlay  in  the  establishment 
of  an  adequate  cost  department  is  deemed 
advisable.  Many  smaller  plants  are  not 
so  well  equipped  and  a  great  many  such 
depend  largely  upon  the  superintendent's 
estimates,  who  rarely  if  ever  takes  into 
account  the  proper  relation  between 
"  factory  cost"  and  "  selling  cost." 

Manufacturers  who  feel  that  they  can- 
not, for  some  reason  or  other,  maintain  a 
competent  cost  clerk,  ought  to  examine  at 
least  into  the  way  the  costs  are  prepared. 
They  may  find  that  it  will  be  very  desir- 
able to  let  the  superintendent  furnish  the 
office  with  the  bare  cost  of  labour  and 
material  per  piece,  pound,  yard,  lot  or 
other  unit,  and  let  some  one  in  the  office, 
familiar  with  the  amount  of  the  various 
classes  of  expense,  add  to  that  cost  as 
[127] 


Essential  Elements  of  Business  Character 

nearly  the  correct  percentage  for  "  selling" 
and  other  expenses  as  he  can  be  trusted 
to  calculate. 

Any  such  general  method  will  prob- 
ably result  in  the  placing  of  too  much  ex- 
pense on  some  articles  and  too  little  on 
others,  but  the  purely  imagined  profits  axe, 
not  likely  to  be  so  greatly  out  of  propor- 
tion to  the  real  facts  as  calculations  made 
solely  by  the  average  superintendent. 

EXPENSE  A  FACT — NOT  THEORY 
Cash  paid  and  gone  for  "general  ex- 
penses "  is  a  fact — sometimes  a  hard  fact. 
Cost  accounts  are  not  facts  in  themselves. 
If  accurate,  they  record  the  facts,  includ- 
ing proper  provision  for  all  items  of  cost. 
If  unreliable,  accounts  are  worthless.  Be- 
lieve me,  this  is  not  a  mere  theory  !  Any 
successful  business  friend  of  ours  will  tell 
us  that  we  must  know  our  costs  accurately 
if  we  want  to  avoid  anxious  hours.  Un- 
less he  has  a  monopoly,  he  will  tell  us  that 
competition  simply  drives  a  man  to  closely 
scrutinize  his  cost  accounts  and  to  watch 
like  a  hawk  the  results  as  shown  by  those 

[128] 


Imagined  Profits 


accounts,  pouncing  on  items  here  and 
there  until  he  has  reduced  the  figures  to 
the  absolute  minimum. 

On  the  witness  stand,  in  a  bankruptcy 
proceeding,  a  manufacturer  of  ladies'  suits 
testified  that  he  did  not  know  why  he  had 
failed.  He  swore  that  he  had  made  from 
two  dollars  to  three  dollars  at  least  on 
each  suit,  even  of  the  cheapest  grade,  and 
had  sold  thousands  of  all  grades.  Further 
examination  by  the  attorney  for  the  cred- 
itors brought  out  the  fact  that  in  his 
imagined  profits  he  did  not  take  into  con- 
sideration the  cost  of  selling  the  suits  nor 
his  rent,  heat,  light  and  power,  which  if 
added  to  the  cost  would  have  produced 
figures  overlapping  the  selling  price. 

After  examining  a  number  of  such  in- 
stances one  almost  arrives  at  the  thought 
that  many  manufacturers  do  not  really 
comprehend  the  essential  matters  con- 
nected with  their  business. 

The  unimaginative  man,  of  course,  can 

rarely  conduct  a  successful  business,  but 

there  are  certain  vital  facts  expressed  in 

such  real  terms  as  "  costs  "  and  "  profits  " 

[  I29] 


Essential  Elements  of  Business  Character 

which  ought  to  be  so  carefully  examined 
and  studied  as  to  become  almost  a  second 
nature  to  the  manufacturer. 

Such  elemental  principles  will  not  be 
ignored  and  no  amount  of  "  hope  "  will 
remove  the  effect  of  omissions  to  study 
them. 

Important  as  the  problems  are,  they  are 
fortunately  easy  of  solution — at  least  to  a 
reasonable  degree  of  accuracy.  Much 
easier  is  it  to  correctly  calculate  profits 
than  to  imagine  them.  The  preliminary 
study  consists  largely  in  the  search  for 
knowledge  of  the  particular  principles 
governing  the  subject  of  costs.  Once 
these  are  understood,  the  manufacturer 
should  have  no  difficulty  in  mastering 
enough  of  the  "  science "  to  guide  his 
business  into  successful  channels. 

It  would  be  interesting  to  lay  down  a 
set  of  general  rules  for  manufacturers  to 
commit  to  memory,  but  the  number  of 
exceptions  to  those  rules  arising  out  of 
the  peculiarities  of  each  individual  plant 
would  effect  their  usefulness. 

Each  plant  should  have  its  own  rules, 
[130] 


Imagined  Profits 


its  own  principles ;  and  the  books  and 
accounts  of  the  business  should  be  so 
kept  that  the  manufacturer  can  readily 
extract  the  particular  principles  ruling  the 
science  of  his  own  business. 

If  he  will  cut  out  all  pure  guesses,  and 
test  all  estimates  by  the  principles  thus 
established,  the  manufacturer  will  elimi- 
nate much  of  the  danger  of  imagining 
profits  before  they  are  actually  earned. 
Caution  should  come  to  his  aid  to  guard 
against  danger  in  this  respect,  as  it  does 
in  many  other  phases  of  his  business  life. 

Now,  to  change  the  subject,  and  return 
from  figures  to  something  more  interest- 
ing for  our  last  thought,  let  us  see  what 
it  is  that  makes  business  worth  while. 


[131] 


X 

BUSINESS  SENTIMENT 

ON  a  suburban  train  homeward 
bound  at  the  end  of  the  day  sat, 
with  a  friend,  the  proprietor  of  a 
large  paint  factory.  Immediately  behind 
was  the  president  of  an  important  ware- 
house company,  who  leaned  forward  with 
a  hearty  "  How  are  you  ?  "  to  his  friends 
in  front. 

An  interchange  of  pleasantries  followed 
this  greeting.  A  compliment  from  one  of 
those  on  the  front  seat  to  the  warehouse 
man  elicited  the  response,  "  I  tell  you  that 
a  glad  hand-clasp  and  a  hearty  greeting 
go  a  long  way  even  in  business."  The 
conversation  drifted  into  a  friendly  dis- 
cussion of 

SENTIMENT   IN   BUSINESS 
The  warehouse  man  related  that  while 
yet  a  boy  in  a  glass  manufacturer's  office 
the    proprietor   had    once    said   to   him, 

[  132] 


Business  Sentiment 


"John,  I  want  to  impress  you  with  the 
thought  that  if  we  can  get  our  customers 
to  give  us  the  preference  we  shall  do 
well."  The  warehouse  man,  now  suc- 
cessful, added :  "  What  a  tremendous 
thought  lies  in  that  simple  expression ! 
All  other  things  being  equal,  if  business 
men  will  give  any  man  a  preference  over 
others  in  his  line,  he  will  get  all  the  busi- 
ness he  can  handle." 

This  thought  embodies  one  of  the  forms 
in  which  sentimentality  expresses  itself  in 
business.  What  is  sentiment?  What  is 
business  ?  Those  who  estimate  business 
to  be  the  abstract  incarnation  of  all  that 
is  grasping  and  greedy  can  scarcely  ap- 
preciate the  indescribable  effect  of  subtle 
influences  passing  back  and  forth  be- 
tween men,  prompting  acts  not  directly 
urged  by  thoughts  of  gain.  Men  who 
entertain  such  opinions  will  spontaneously 
spurn  the  idea  that  so  weak  a  characteris- 
tic as  sentiment  exists  in  business  trans- 
actions. Yet  the  day  in  the  life  of  any 
business  man  during  which  he  has  not 
been  guided  by  other  than  absolutely 
[133] 


Essential  Elements  of  Business  Character 

sordid  calculations  is  rare  indeed.  What 
is  sentiment?  When  we  seek  to  frame 
the  question  in  a  way  to  call  for  a  busi- 
ness answer,  we  are  almost  compelled  to 
inquire  concerning  the  effect  upon  busi- 
ness of  the  elimination  of  sentiment.  What 
is  business  without  sentiment?  seems  as 
intelligent  a  question  to  put  as  to  ask, 
"  What  is  sentiment  in  business?" 

WHAT  IS  BUSINESS? 
What  an  inclusive  word  is  business ! 
Your  business  !  My  business !  Business 
consists  of  anything  that  occupies  our 
time  and  attention.  We  may  be  con- 
cerned in  manufacturing,  mercantile,  or 
professional  pursuits,  or  engaged  in  the 
study  of  religion,  art,  or  literature;  so 
long  as  whatever  we  do  occupies  our  time 
and  attention,  we  are  in  business.  If  we 
are  busy  at  anything,  we  are  in  business ; 
if  idle,  whatever  we  call  our  nominal  oc- 
cupation, we  are  not  in  business.  Now, 
it  can  be  seen  that  business  is  nothing 
but  an  expression  indicating  purposeful 
activity.  Any  transaction  involving  the 
[134] 


Business  Sentiment 


thing  which  we  are  especially  interested 
in  doing  constitutes  business.  Acts,  not 
facts,  make  business. 

We  can  no  more  dissociate  the  act  of  a 
man  from  the  man  himself  than  we  can 
think  of  a  man  without  form.  Our  acts 
are  the  fruits  of  thought  and  desire. 
Mind  and  will !  What  else  is  there  to  a 
man?  His  brains  and  heart  are  con- 
stantly influenced  by  and  influencing  those 
surrounding  him.  One  could  with  diffi- 
culty imagine  a  man  cold-blooded  enough 
to  go  through  one  short  business  day  im- 
mune from  environing  atmospheres. 

RESISTANCE  TO   GOOD   INFLUENCES 
WELL-NIGH  IMPOSSIBLE 

No,  much  as  we  might  desire,  we  can- 
not escape  the  influences  going  forth  from 
our  associates.  Affection  will  manifest 
itself  everywhere.  Few  cold-blooded  busi- 
ness propositions  are  ever  carried  through 
to  a  conclusion  with  entire  absence  of 
feeling.  The  reason  is  obvious.  Action 
never  occurs  until  the  will  is  set  in  motion. 
What  is  will  but  a  bundle  of  desires,  and 
[135  1 


Essential  Elements  of  Business  Character 

what  are  desires  but  a  bundle  of  passions 
more  or  less  acute,  more  or  less  noble  ? 

Thus  we  see  that  business  acts  are  al- 
ways accompanied  by  feelings  of  some 
sort.  This  feeling  may  not  always  be- 
long to  the  highest  class.  Sometimes  it 
may  not  be  properly  described  as  senti- 
ment. Some  motives  in  business  transac- 
tions may  be  of  the  baser  sort ;  and  it  is 
to  the  occasional  exhibitions  of  this  class 
of  wrong  passions  that  the  negative  ex- 
pression "  No  sentiment  exists  in  business" 
may  be  charged.  What  we  really  mean 
to  say  is  that  no  purely  unselfish  motives 
are  to  be  found  in  the  ordinary  course  of 
business  transactions.  I  am  ready  to 
combat  even  this  restated  proposition. 
So  far  from  being  a  true  statement  of  the 
case,  it  is  contrary  to  the  experience  of  all 
thoughtful  observers.  Take  salesman- 
ship, for  example.  One  of  the  most 
prominent  characteristics  of  the  successful 
salesman  consists  in  his  ability  to  obtain 
an  order  through  friendship.  He  seeks 
and  obtains  a  preference  over  his  fellows 
who  have  merchandise  to  offer  of  equal 

[•36] 


Business  Sentiment 


texture  and  price.  Note  the  disappoint- 
ment creeping  through  us  when  an  order 
or  commission  or  prospective  fee,  thought 
to  be  on  its  way  to  us,  has  been  directed 
to  other  channels.  Somebody  else  ob- 
tained the  preference,  to  our  undoing. 

FRIENDLY  FEELINGS   MUST  BE  RECIP- 
ROCAL 

Theoretically  we  place  our  wares  on 
the  market  without  plea  for  favours — but 
only  theoretically.  We  consciously  or 
unconsciously  seek  the  preference  of  every 
one  who  will  grant  it.  The  foundation 
for  the  success  of  a  business  man  is  friend- 
ship, and  he  must  cultivate  it  to  get  far 
on  in  the  world. 

This  friendship  must  be  reciprocal.  No 
man  can  long  stand  the  drain  of  one-sided 
favours.  The  bitter  experience  of  those 
who  have  attempted  to  "hog  it"  attests 
the  truth  of  this  observation. 

Some  years  ago  a  soap  manufacturer 
became  suddenly  prosperous.  Fortunate 
advertisements  created  a  demand  for  his 
soap  to  such  an  extent  that  he  became 


Essential  Elements  of  Business  Character 

autocratic  in  his  dealings  with  merchants 
who  sent  orders  to  him.  It  is  said  that  so 
exaggerated  was  his  idea  of  his  importance 
that  prominent  wholesale  houses  of  un- 
questioned financial  standing  were  com- 
pelled by  this  soap  manufacturer  to  send 
the  actual  cash  with  each  order.  He 
would  not  even  accept  their  checks.  This 
irritating  rule  was  complied  with  under 
strong  protest.  While  the  fad  for  his 
soap  lasted  the  king  held  fearful  sway, 
but  when  his  meteor  began  to  fall  and  his 
soap  ceased  to  be  deemed  an  absolute 
necessity  by  the  people,  did  the  merchants 
experience  feelings  of  regret  ?  Did  they 
come  forward  and  offer  to  bolster  up  the 
shrinking  king?  You  can  depend  upon 
it,  his  fall  was  short  and  hard.  He  had 
robbed  himself  of  the  most  precious  thing 
a  man  can  have  in  business — his  friends. 
Sometimes  the  effects  of  preference  in 
business  are  obvious ;  in  other  cases  the 
recipient  of  the  favour  never  knows  to 
whom  or  what  he  is  indebted.  A  friendly 
act  or  charitable  deed  by  a  merchant  may 
be  recalled  by  a  purchaser  in  time  to  effect 

[138"] 


Business  Sentiment 


his  choice  as  between  several  merchants 
otherwise  equal  in  his  eyes. 

In  directors'  meetings  it  frequently  hap- 
pens that  when  the  letting  of  contracts  is 
being  considered,  there  are  two  or  more 
bidders  so  nearly  equal  in  price  and 
responsibility  that  there  is  little  oppor- 
tunity for  the  exercise  of  business  judg- 
ment. More  often  than  not  one  of  the 
directors  will  suggest  that  one  of  the 
bidders  be  given  the  contract  because 
he  knows  of  some  worthy  act  or  good 
trait  of  character  possessed  by  the  man 
whose  name  he  mentions.  What  mo- 
tive prompted  the  decision  ?  Nothing  but 
friendly  feeling — sentiment. 

Perhaps  the  most  striking  example  of 
deliberate  and  premeditated  preference  is 
shown  in  an  incident  that  occurred  a  short 
time  ago  in  Chicago. 

A  retail  shoe  man,  a  druggist,  and  a 
young  lawyer  sat  at  lunch  together  one 
stormy  day.  Business  conditions  were 
discussed  and  frank  confessions  by  each 
as  to  the  amount  of  his  own  business 
came  without  hesitation.  The  lawyer  felt 
[  139] 


Essential  Elements  of  Business  Character 

somewhat  discouraged  in  having  to  re- 
port very  little  work  to  do.  It  was  noticed 
that  he  had  eaten  sparingly.  He  left  the 
restaurant  before  the  others  had  finished. 
No  sooner  had  be  proceeded  beyond  hear- 
ing distance  than  the  shoe  dealer  said  to 
the  other : 

"It's  a  shame  that  Jim  can't  get  more 
business.  He  has  more  brains  than  any 
other  fellow  I  know.  I  wonder  whether 
we  can  help  him  in  any  way." 

"I've  just  been  thinking  the  same 
tning,"  replied  his  friend.  "  What  do 
you  say  to  'boosting'  him  among  our 
friends?  I  don't  mean  just  the  ordinary 
glad  word  when  somebody  asks  us  about 
him.  What  I  mean  is  this :  You  and  I 
will  make  a  business  of  bringing  his  name 
up  every  time  we  meet  anybody  likely  to 
have  any  law  business  to  give  out." 

After  some  further  planning  the  two 
friends  separated.  Thereafter  they  sought 
every  opportunity  to  bring  the  lawyer  to 
the  notice  of  their  business  friends,  with 
the  result  that  within  six  months  the  law- 
yer reported  a  very  busy  practice.     Of 

[i4o] 


Business  Sentiment 


course  he  learned  to  whom  he  was  in- 
debted, and  he  gladly  vouches  for  the 
truth  of  the  story. 

TRY  IT  YOURSELF 

If  any  man  or  woman  in  business 
doubts  the  prevalence  of  this  sentiment 
in  business,  let  him  or  her  review  the 
things  heard,  seen,  and  done  during  the 
course  of  any  selected  day.  Those  who, 
in  checking  off  the  occurrences  passing 
before  their  memories,  fail  to  find  stirring 
examples  of  friendship,  may  assure  them- 
selves, not  that  such  things  have  not 
taken  place,  but  rather  that  they  have 
not  been  heeded. 

Preferences  may  be  given  and  not  ap- 
preciated. Pure  motives  prompting  help- 
ful assistance  may  be  misinterpreted  and 
the  good  deed  turned  into  evil  in  the 
sight  of  the  recipient;  nevertheless,  the 
good  deed  is  there,  although  the  percep- 
tion is  deficient. 

The  successful  business  man  who  has 
risen  head  and  shoulders  above  the  men 
of  ordinary  ability  is  quick  to  recognize 
[»4i] 


Essential  Elements  of  Business  Character 

preferences  and  to  return  the  favours.  He 
remembers  his  friends,  knowing  that  for- 
gotten kindness  cools  the  ardour  of  even 
the  warmest  heart. 

Moreover,  he  does  not  await  the  first 
offerings  from  his  friends.  He  is  ready 
to  create  evidences  of  his  big  way  of  do- 
ing business.  He  extends  preferences  to 
others  in  advance  of  any  foreseen  oppor- 
tunity for  the  return  to  him. 

Be  ready  to  give  something  not  "  nomi- 
nated in  the  bond,"  and  you  will  surely 
find  responsive  hearts.  There  is  no  secret 
of  success  more  pronounced  in  its  effect- 
iveness than  the  proper  exercise  of  good 
sentiment  in  business. 

But  let  us  not  forget  that  we  must  first 
earn  a  deserved  reputation  for  square 
dealings  before  we  are  rightfully  entitled 
to  seek  preferment.  Our  goods  or  serv- 
ices must  be  at  least  equal  to  the  best, 
and  our  contracts  must  be  faithfully  exe- 
cuted, before  we  can  hope  to  cultivate 
successfully  that  preferred  friendship 
which  forms  the  crowning  triumph  of  an 
honourable  business  career. 
[  J42] 

3  Printed  in  the  United  States  of  A  merica 


